FHRAI Demands Major GST Relief for Hospitality Sector

FHRAI Demands Major GST Relief for Hospitality Sector

The Federation of Hotel and Restaurant Associations of India (FHRAI) has called on the government for urgent and extensive Goods and Services Tax (GST) reforms to provide significant financial relief to the hospitality sector.

Key Demands for GST Relief

• Restoration of Input Tax Credit (ITC): FHRAI seeks the restoration of full ITC benefit for hotels and restaurants. The current structure, which denies ITC, forces the industry to absorb taxes paid on construction, maintenance, and supplies as costs, ultimately raising the final price for consumers and hindering competitiveness.
• Delinking of Food & Beverage (F&B) Rates from Room Tariffs: The association demands that the GST rate for restaurants located within hotels be completely delinked from the room tariff. Historically, restaurants inside hotels with high room tariffs have been subject to a higher GST rate (e.g., 18%), which disincentivizes dining at organized hotel outlets.
• Regularization of Past Dues: FHRAI has asked the government to implement a mechanism for the regularization or amnesty for disputed past tax demands and dues. This measure would provide finality and prevent long-pending litigation and retrospective tax liabilities that continue to plague the sector.
• Simplification of Tax Structure: The overall plea is for a stable, rationalized, and simplified GST framework that makes India a more attractive and competitive destination for both domestic and international tourists.