The Federation of Hotel & Restaurant Associations of India (FHRAI) on Thursday urged the government to rationalise Goods and Services Tax (GST) in the tourism and hospitality sector. The association stressed that this step is essential for positioning tourism as a growth engine for the economy and for making India more competitive compared to other Asian destinations.
In a representation to Finance Minister Nirmala Sitharaman, who also chairs the GST Council, the industry body called for a uniform GST rate of 5 per cent with input tax credit across hotels, restaurants, and tourism services. Rationalising GST will ease compliance and improve the ease of doing business for the sector.
“Tourism is not just about travel—it is a national growth engine. Rationalising GST is essential to make India globally competitive, affordable for travellers, and attractive for investors,” FHRAI President said, welcoming the recent GST reforms announced by Prime Minister Narendra Modi on Independence Day. He added that aligning tax policy with the sector’s potential is critical for meeting the government’s Vision 2047 of a developed nation.
FHRAI also suggested delinking GST on food and beverage services from hotel room tariffs, arguing that the current linkage creates compliance challenges and revenue losses. It further requested that past GST payments be regularised on an “as is” basis to address demand notices arising from interpretational issues.
Tourism accounts for nearly 5 per cent of India’s GDP, with the potential to double this contribution if supported by conducive policies, FHRAI said. The sector is also among the largest generators of employment, with a multiplier effect.
The association cautioned that India’s current tax structure makes tourism less competitive compared with Asian peers such as Thailand, Indonesia, Vietnam, Sri Lanka, Singapore, and Malaysia, which levy taxes ranging between 6 and 10 per cent. Higher GST, it said, reduces affordability for travellers and diminishes India’s appeal as a global destination.
