FHRAI demands restoration of input tax credit on room tariffs of up to Rs 7,500
Federation of Hotel & Restaurant Associations of India (FHRAI) has demanded restoration of input tax credit on room tariffs of up to Rs 7,500. The government has brought down the goods and services tax (GST) on such tariffs to 5 per cent from 12 per cent. However, before the GST cut, there was a provision for availing input tax credit (ITC), which has now been removed.
FHRAI's newly elected President Surendra Kumar Jaiswal highlighted that 90 per cent of India's hotels operate with room tariffs below Rs 7,500, and are now subject to a 5 per cent GST without ITC. Although the recent revision in the GST rates is a continued effort to rationalise tax rates to benefit consumers, improve compliance, and support growth, he argued it has turned into an added cost for guests and created structural cost burdens on hotels, particularly in tier-II and tier-III cities.
He stressed the withdrawal of ITC has escalated unrecoverable costs on rentals, utilities, outsourced manpower, and capital expenditure, deterring investments and threatening the growth of domestic tourism. FHRAI called for reinstating ITC at the earliest and issued a clarificatory circular to remove compliance ambiguities.
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