Quick Summary
The Federation of Hotel Restaurant Associations of India (FHRAI), at its 69th Annual General Meeting, raised strong concerns over the existing Goods and Services Tax (GST) framework that levies 5% GST on hotel room tariffs up to Rs 7500 per night without Input Tax Credit (ITC). FHRAI President warned that the current structure is driving unrecoverable taxes into operating costs, reducing affordability for domestic travellers, and deterring investments in India's mid-market hospitality segment.
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FAQ :
FHRAI is asking the GST Council to revisit the 5% GST slab for hotels with room tariffs under Rs 7500 and allow them to claim Input Tax Credit (ITC) on their expenses.
The current 5% GST on hotel rooms under Rs 7500 is a concern because hotels cannot claim Input Tax Credit (ITC) on expenses like rent, utilities, and services, making it an unrecoverable cost that increases operating expenses.
FHRAI states that the policy reduces affordability for domestic travellers, deters investment in the mid-market hospitality segment, and disproportionately affects smaller properties, which form the backbone of India's tourism infrastructure.
Approximately 90% of hotels in India fall under the sub-Rs 7,500 tariff category.
Allowing ITC could encourage new investments, ease financial strain on operators, improve affordability for travellers, and ultimately boost India's tourism growth.
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