Quick Summary
The Federation of Hotel and Restaurant Associations of India (FHRAI) has raised serious concerns over the recent revision in GST rates, stating that while the move aims to rationalize taxes and improve compliance, it has inadvertently created structural cost burdens on India's hospitality sector - particularly affecting small and mid-scale hotels in Tier II and Tier III cities. Speaking at the association's 69th Annual General Meeting, the newly elected FHRAI President said that the withdrawal
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FAQ :
FHRAI's main concern is that the recent revision in GST rates, specifically the withdrawal of Input Tax Credit (ITC), has created structural cost burdens for the hospitality sector, especially affecting small and mid-scale hotels.
The withdrawal of ITC means that essential expenses like rentals, utilities, outsourced manpower, and capital expenditure have become unrecoverable costs for hotels, increasing their operational expenses.
Small and mid-scale hotels in Tier II and Tier III cities are particularly affected, as many operate with room tariffs below Rs 7,500 and are now taxed at 5% without the benefit of ITC.
FHRAI urges the government to reinstate Input Tax Credit (ITC) and issue a clarificatory circular to remove ambiguities in compliance. They also seek clear definitions for copyright societies to prevent duplicate collections.
FHRAI is also highlighting challenges related to copyright royalty demands, where multiple societies raise overlapping claims, causing legal and financial pressure on hotels and restaurants.
FHRAI represents over 1 lakh hotels and 5 lakh restaurants across India.
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