Quick Summary
The Hotel and Restaurant Association (Western India) (HRAWI) has urged the government to reconsider the recent Goods and Services Tax (GST) reforms for the hospitality sector, proposing a balanced approach that safeguards both consumer benefits and industry sustainability. HRAWI, which represents restaurants and hotels up to the five-star deluxe category, submitted a detailed representation to the Prime Minister seeking urgent rationalisation of the newly announced GST structure. The move comes
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FAQ :
The hospitality sector is proposing either a 5% GST with 50% Input Tax Credit (ITC) or an 18% GST with full ITC on two-thirds of the value for rooms priced under £7,500.
The absence of ITC increases operational costs, as credits for essential inputs like equipment and linen are unavailable. This can raise the cost of setting up new hotels by at least 10%.
The changes could inflate costs for budget and mid-scale hotels, making their accommodation less competitive compared to neighbouring countries.
HRAWI recommends delinking food and beverage (F&B) services from room tariffs and allowing F&B providers to choose between 5% GST without ITC or 18% GST with full ITC.
The hospitality sector contributes 5.8% to India's GDP and supports over 32 million jobs.
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