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18 th Mar 2022

FHRAI has said that many countries have reduced the tax rates on the hospitality services in the post-Covid scenario and therefore requested the Group of Ministers (GoM) which is evaluating the present GST structure to consider rationalising the GST rates applicable to the hotels to make the Indian tourism packages competitive compared to other competing destinations.


In their latest memorandum addressed to the Finance Minister, the Hotel Federation has asked for enhancement of the threshold limit of hotel room tariff for charging 18 per cent GST from the current INR 7500 to INR 9500. Similarly, it also requested for enhancement in the zero GST threshold from the current tariff level of INR 1000 to INR 2000.

While demanding the raising of the tariff threshold, the Federation points out the large difference that has come in the exchange rate of the Indian Rupee against the Dollar in the last one year.

The hotel federation also asked to treat all F&B revenue in a hotel & standalone restaurant as bundled services to be charged GST at the rate 5 per cent composite scheme for units that are not availing ITC; and at the rate 12 per cent GST for units that are availing ITC.


In a representation to the Finance Ministry, the Federation of Hotel & Restaurant Associations of India (FHRAI) has asked to enhance the threshold limit of 18% GST on hotel tariff from the current INR 7,500 to INR 9,500.

“The rates should be delinked from any room tariffs if they are part of hotels. Simplification of GST rules will lead to greater compliance, especially from small units. A mechanism should be in place to enable the establishments to avail input of GST paid on rent and other GST costs. This will make the businesses more viable,” the Federation says.

In order to encourage more domestic consumption of hospitality products, the FHRAI memorandum suggests IT exemption under 80C up to INR 50,000 for valid GST hotel bills of any state other than the home state of the Individual assessee paid for by digital mode.

It also reiterates the demand to allow IGST billing to the hotels for corporate bookings & MICE. This, FHRAI says, will enable the companies to avail GST input credit which will encourage them to spend their annual budgets in Indian cities other than holiday destinations of South East Asia.”

Other key demands include reduction of GST for LPG used in hotels; removal of GST for rent payments or allowing input credit for rent payments; a new provision in law for an immediate refund of GST paid by new hotel projects and existing expansions, etc.




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