The hospitality industry has renewed its demand for a uniform 5% GST on hotel accommodation and meals, urging the GST Council to rationalise the existing slab structure that, industry representatives say, is outdated and creates operational confusion.
The demand has been raised by the Hotel and Restaurant Association of Haryana (HRAH), which has sought the removal of the current Rs 7,500 room tariff threshold that determines GST rates for hotels. At present, hotel rooms priced up to Rs 7,500 attract 5% GST without input tax credit (ITC), while rooms above this limit are taxed at 18% with ITC.
According to the association, this dual-rate system leads to anomalies, particularly in the taxation of food services. While meals served in standalone restaurants are taxed at 5%, the same food supplied through room service in higher-tariff hotels attracts 18% GST, causing confusion for guests and compliance challenges for hotel operators.
Col. Manbeer Choudhary (Retd.), President of HRAH and former chief of the Federation of Hotel and Restaurant Associations of India (FHRAI), said the tariff cap was fixed nearly ten years ago and no longer reflects present-day costs. He pointed out that inflation, rising input expenses and increased operational costs have pushed room tariffs higher, forcing many mid-segment hotels into the 18% GST bracket.
The hotel body has recommended a single 5% GST rate for rooms and meals across all hotel categories, arguing that such a move would make travel more affordable, increase hotel occupancy and enhance India's competitiveness as a tourist destination.
Industry stakeholders believe that GST rationalisation would also reduce disputes, simplify billing and improve ease of doing business in the hospitality sector, while supporting the government's broader tourism and employment goals.
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