Hoteliers are seeking an uniform 5 per cent goods and services tax with input tax credit across entire hospitality and tourism sector to ease compliance and reduce cost burden for travellers.
This demand was put forth in representations to finance minister Nirmala Sitharaman following government’s decision to simplify the tax structure.
Currently, hotel rooms priced up to ₹7,500 per day fall under the 12 per cent GST bracket, a threshold set 6–7 years ago. Those above ₹7500 per day are charged 18 per cent.
Review slabs
Hotel Association of India (HAI) has urged policy makers to review these slabs in line with inflation and raise it to ₹15000 as tax rates directly influence affordability for travellers and the overall competitiveness of India as a tourist destination.
“The rate of 18 per cent for hotels is too prohibitive, increases hotel tariff to put India’s competitiveness globally at risk,” HAI president said on Friday.
Federation of Hotel & Restaurant Associations of India (FHRAI) said countries such as Thailand, Indonesia, Vietnam, Sri Lanka, Singapore, and Malaysia operate under lower tax regimes, ranging between 6 and 10 per cent, which helps them attract significantly larger tourist inflows.
FHRAI said there is a need for uniformity and simplicity in GST to make India’s tourism sector more accessible and globally competitive.
The association has recommended the introduction of a uniform GST rate of five per cent with input tax credit across all hospitality and tourism services. It has also called for doing away with the linking of GST on food and beverage services from hotel room tariffs, pointing out that the current linkage creates operational inefficiencies and revenue losses for hotels. In addition, it has requested that past GST payments be regularised on an “as is basis” to address demand notices arising from earlier ambiguities in the interpretation of tariff values and service classifications.
