FHRAI urges GST relief for hospitality industry

Surendra Kumar Jaiswal elected President of FHRAI

The newly elected FHRAI President, Surendra Kumar Jaiswal, called for urgent government action to address GST tax burdens and promote sustainability in hospitality. FHRAI stresses reforms for growth and competitiveness.

The Federation of Hotel & Restaurant Associations of India (FHRAI), representing over 100,000 hotels and 500,000 restaurants nationwide, has urged the Indian government to provide relief to the hospitality industry by allowing input tax credit (ITC) under the revised Goods and Services Tax (GST) regime.

At a specially-convened press meet in New Delhi on Saturday, Surendra Kumar Jaiswal, the newly elected President of FHRAI said that though a vast majority of Indian hotels have room rates below the threshold of INR 7500 per night, they are deprived of input credit even though they pay GST on every purchase.

He said that though the recent GST revisions aimed to rationalise tax rates to improve consumer benefits and enhance compliance, the removal of ITC has paradoxically escalated costs for guests and imposed structural cost burdens, especially on hotels in Tier II and Tier III cities.

“For smaller hotels, GST remains at 5 pc. The issue is that earlier, hotels with tariffs below INR 7,500 charged 12 pc GST and could claim input credit. Now, with GST at 5 pc, they pay 18 pc on most purchases but cannot claim credit, putting them at a disadvantage. We request the government to introduce a mechanism to address this. Also, since Covid-19, guest expectations have changed. Travellers now demand comfort and sustainability. Whether big or small, every hotel must adapt by becoming eco-friendly. Without this, guests may not return,” Jaiswal told India & You on the sidelines of the conference.

The press meet was convened to coincide with the 69th Annual General Meeting of FHRAI where Jaiswal was elected the President.

The gathering brought together industry stakeholders to address the pressing policy challenges facing India’s hospitality sector, which directly and indirectly supports over 60 million livelihoods.

In his address, Jaiswal called for immediate government intervention to safeguard the sector’s future amid mounting operational costs and regulatory burdens.

The association highlighted that hotels and restaurants endure repeated royalty demands from multiple societies, resulting in undue legal and financial pressures.

Jaiswal also expressed hopefulness regarding government cooperation.

“I feel that the government has not only started listening, but has also begun implementing initiatives. We plan to share all our findings with our research wing and support our efforts with data, as data is the driving force in today’s world. We will present them with clear information, this is the data, this is the revenue, and this is the impact. Our research wing will be dedicated to compiling and analysing these details. We are hopeful that the true value of tourism is now being recognised, and we look forward to receiving strong support from the government,” Jaiswal adds.

“If you see the tax situation in India, you can see that when we compare with all our neighbouring countries, India is the only country wherein the tax rates are in double digits. All our competitors in the neighbourhood are having tax below 10 pc,” Jaison Chacko, Secretary General, FHRAI tells India & You.

“Simply advocating and simply presenting a representation will not do the purpose. So, we do give facts and figures and evidence to the government to actually give an eye-opener to them also to understand why Indian tourism is not able to actually grow to its potential,” Chacko adds.

FHRAI made a forceful appeal to the government for corrective measures to enhance the sector’s competitiveness, investment appeal, and contribution to India’s economic growth story.