FHRAI seeks reduced GST rates for revival of hospitality industry

Hotel and restaurant body FHRAI has sought reduction in GST rates for the hospitality industry, as the sector struggles to recover from the impact of the pandemic-induced restrictions.

The Federation of Hotel and Restaurant Associations of India (FHRAI) wrote to Finance Minister Nirmala Sitharaman earlier this week making suggestions for consideration of the Group of Ministers (GoM) that was constituted by the GST Council to evaluate the present tax structure.

"On account of the unprecedented challenges the hospitality industry is facing due to the COVID-19, we humbly request the government to take urgent policy measures to support the industry in its survival efforts. We earnestly look forward to your support to take up our suggestions with the GoM constituted by the GST Council," FHRAI said.

 

Some of the key measures suggested include enhancing the threshold limit of hotel room tariff for charging GST at 18 per cent to Rs 9,500 from Rs 7,500 at present; and raising the threshold limit for zero GST for hotel rooms from Rs 1,000 to Rs 2,000 per room per day, to boost higher as well as the lower budget segment.

Stressing that simplification of GST rules will lead to greater compliance especially from small units, FHRAI suggested that a mechanism be put in place to enable the establishments to avail input of GST paid on rent and other costs, arguing that this will make the businesses more viable.

It also recommended allowing valid GST hotel bills of any state other than the home state of the individual assessee paid by digital mode being exempt under section 80C for an additional amount of Rs 50,000.

"The potential additional tax saving of Rs 50,000 will encourage citizens to travel within India. This will give impetus to hotels as well as ancillary industries," FHRAI said.