FHRAI asked the GoM to consider rationalising the GST rates applicable to hotels to make the Indian tourism packages competitive.
The Federation of Hotel & Restaurant Associations of India (FHRAI) has said that many countries had reduced the tax rates on the hospitality services in the post-Covid scenario and therefore requested the Group of Ministers (GoM) which has been evaluating the present GST structure to consider rationalising the GST rates applicable to hotels to make the Indian tourism packages competitive.
In their latest memorandum addressed to the Finance Minister, FHRAI 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 pointed out the large difference that had come in the exchange rate of the Indian Rupee against the Dollar in the last one year.
The federation also asked to treat all F&B revenue in a hotel and 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.
Other key demands included 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.
“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 said in the memo.
In order to encourage more domestic consumption of hospitality products, the FHRAI memorandum suggested 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.
Other key demands included 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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