The Federation of Hotel & Restaurant Associations of India (FHRAI), the world’s third-largest hospitality association, raised concerns over the ongoing issue of linking GST on Food & Beverage (F&B) services to hotel room tariffs at the DG GST Samvad meeting on November 14.
The FHRAI delegation, including Vice President Mr. Pradeep Shetty and other prominent leaders, urged the government to delink F&B rates from accommodation charges to simplify compliance and foster industry growth.
Currently, hotels with room tariffs above ₹7,500 face an 18% GST on F&B services (with Input Tax Credit), while those below ₹7,500 are taxed at 5% (without ITC). FHRAI argues that this policy complicates operations, particularly for midscale hotels, and deviates from GST’s core principles of neutrality and simplicity.
Mr. Shetty emphasized that separating F&B charges from room rates would enhance pricing flexibility, streamline tax compliance, and promote growth across the hospitality sector. He also proposed introducing an 18% GST slab with ITC benefits for all restaurants, which would reduce operational costs and boost tax revenue.
FHRAI’s proposal aims to create a fairer and more efficient tax environment, benefiting both the industry and the government by increasing GST revenue through greater operational flexibility and competitive pricing. The association strongly urges the GST Council to consider these measures for a more equitable and growth-oriented policy.
