The Hotel and Restaurant Association of Haryana (HRAH) has urged the GST Council to impose a uniform five per cent GST rate on food and room rents across all hotel and restaurant categories nationwide, scrapping the existing Rs 7,500 room-rent threshold.Col. Manbeer Choudhary (retd.), HRAH president and former head of the Federation of Hotel and Restaurant Associations of India (FHRAI), highlighted widespread confusion among guests over varying GST rates tied to room tariffs. Currently, food in standalone restaurants and hotel rooms costing Rs 7,500 or less per night attracts five per cent GST without input tax credit (ITC), while rooms above that threshold draw 18 per cent GST with ITC. This forces hotels to apply different rates, 5% or 18%, to the same food item based on serving location.
He said due to this structure, hotels and restaurants are forced to charge different GST rates, 5 per cent or 18 percent, for the same food item, depending on where it is served.
“We urge the government to adopt a uniform 5% GST rate across all categories, without the Rs 7,500 limit, as a key structural reform for hospitality,” he said.
He noted that the Rs 7,500 threshold, set nine years ago, is outdated amid persistent inflation, rupee depreciation, soaring construction costs (steel, cement, fittings), higher wages, statutory compliance, energy bills, and financing expenses. Today, Rs 7,500 represents moderate rather than luxury accommodation, yet mid-scale and business hotels face the same 18 per cent tax as high-end ones. Rising input costs, often import-linked, compel tariff hikes just to stay viable—pushing mid-segment hotels into the higher bracket without profit gains.
This structure creates unintended issues: heavier tax burdens on mid-scale hotels, reduced customer affordability, lower occupancy (as guests bear passed-on costs), compliance headaches for mixed-tariff properties and diminished competitiveness against international rivals.
“The revision of GST will help in boosting the hospitality sector as well as increase in GST collection,” he added.
Source from: https://www.tribuneindia.com/news/haryana/hotel-body-seeks-uniform-5-gst-on-rooms-meals/
