Hospitality body submit suggestions to FM ahead of GST council meeting2 min read . Updated: 26 May 2021, 08:36 PM IST
- The industry body suggested that all F&B revenue in a hotel and standalone restaurant be treated as bundled services
The Federation of Hotel & Restaurant Associations of India (FHRAI) on Wednesday said that it has submitted a representation to the finance minister, Nirmala Sitharaman ahead of the GST council meeting scheduled on 28 May. The industry body has requested the council to include key policy measures required to revive hospitality industry.
FHRAI requested for the threshold limit for charging GST at 18% on hotel room tariffs be raised from the present Rs.7,500 to Rs.9,500 for bringing parity of rates between the rupee and the dollar. The threshold limit for zero GST for hotel rooms should also be raised from the current Rs.1,000 to Rs.2,000 per room per day.
“The move will boost the lower budget segment, thus encouraging domestic travel and promoting tourism sector in a big way. Also, allowing valid GST hotel bills of any State other than the home state of the Individual assesses paid for by digital mode exempt under section 80C for an additional amount of ₹50,000/- will encourage citizens to travel within India," said Gurbaxish Singh Kohli, vice president, FHRAI.
The industry body also suggested that all F&B revenue in a hotel and standalone restaurant be treated as bundled services and be charged 5% GST on composite scheme for units that are not availing input tax credit (ITC) and 12% GST for units that are availing ITC. IGST billing to the hotels for corporate bookings and meetings, incentives, conferencing & exhibitions (MICE) should also be allowed since it will enable the companies to avail GST input credit which will incentivize them to spend their annual budgets in Indian cities.
Among other suggestions, the body requested the GST Council to remove GST for rent payments for those who are not eligible to claim the input tax credit. Hospitality establishments must be allowed to get refund of unutilised GST credit lying with State Governments which will enable them to get the much needed liquidity.
“We request for a new provision in the law for immediate refund of GST paid by new hotel projects and existing expansions as this will reduce the dependence on debt-financing and bank loans. It will also enable hotels that are under construction and whose construction has been stalled because of lack of funding and cash flow," said Kohli.
The Indian hotel industry’s total revenue in FY 2019-20 stood at Rs.1.82 lakh crore. As per industry estimates, in FY 2020-21, approximately 75% of the industry's revenues got wiped off.
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