The Federation of Hotel & Restaurant Associations of India (FHRAI), the apex body representing the hospitality industry, met Union Finance Minister Smt. Nirmala Sitharaman seeking a fair, growth-driven GST structure for the sector. The delegation urged the government to regularise past GST dues, restore Input Tax Credit (ITC) benefits, and delink F&B GST from room tariffs to ensure uniformity and ease of compliance.
In its submission, FHRAI requested the use of Section 11A of the CGST Act, 2017, to regularise pending GST disputes arising from interpretational ambiguities since 2017 — including confusion over “declared tariff” vs “transaction value” and “specified premises.” It emphasised that the demand notices were not cases of evasion but resulted from inconsistent interpretations, often linked to inflated rates displayed by online travel agencies.
Highlighting the impact of the recent GST revision, which reduced tax on rooms below ₹7,500 to 5% but removed ITC, FHRAI said the change has hurt mid-segment hotels by increasing unrecoverable input costs. The association urged the government to reinstate ITC even at the 5% rate, revise the tariff threshold to ₹12,500 in line with inflation, and classify hotel rooms as “plant and machinery” for ITC eligibility.
FHRAI also called for decoupling restaurant GST rates from room tariffs, allowing hotel-based restaurants the option to choose between 18% with ITC or 5% without ITC, regardless of room pricing. The association noted that the current linkage creates operational disparities and limits revenue flexibility.
A study by the FHRAI Centre of Excellence for Research in Tourism & Hospitality (CERTH) estimates that allowing mid-scale hotels greater pricing freedom could boost annual GST collections by over ₹4,000 crore.
Mr. Surendra Kumar Jaiswal, President, FHRAI, said, “Regularising past dues, restoring ITC, and delinking F&B GST from room tariffs will simplify compliance, boost government revenues, and strengthen the industry’s foundation.”
FHRAI concluded that these reforms will reduce litigation, restore business confidence, and align with the government’s Viksit Bharat @ 2047 vision by creating a transparent, equitable tax regime for India’s hospitality sector.
