Karnataka Hotels body cites high rent, LPG taxes for inability to pass on GST benefits The Karnataka State Hotels Association has expressed its inability to pass on the GST rate cut benefits to consumers as the taxes on LPG cylinders and property rents have not been reduced.
The Association has urged the government to provide relief by reducing the GST on property rent and help hotels survive in the competitive market.
This comes after the GST Council, comprising the Centre and states, decided to reduce tax rates on about 375 goods and services, from September 22—the first day of Navaratri.
In a statement, the association president welcomed the government’s decision to reduce the GST on several items, saying it would benefit the common public. “People are asking when hotel food and room tariffs will be reduced,” he said and explained that the hoteliers cannot lower the prices at this juncture unless they get some relief from the government.
He pointed out that vegetables, meat and some more items are under 0 per cent GST from the beginning, but the 18 per cent GST on cooking gas cylinders has remained untouched. “In addition, hoteliers who run their business from rented buildings are paying 18 GST on the rent they pay,” he said.
Noting that a majority of restaurants and Hotels are run from rented buildings, Shetty said, if the GST is reduced to 5 per cent on rent, then we can pass on the benefits to consumers.
“With the present GST rate, it is not possible to offer any relief to consumers,” he said.
The Federation of Himachal Hotels and Restaurant Association has sought the immediate intervention of Prime Minister Narendra Modi to strictly enforce RBI/MSME restructuring frameworks, halt SARFAESI actions, and ensure the sustainable revival of the tourism and hospitality ecosystem.
The association requested the prime minister for interest subvention and a temporary moratorium on principal and interest payments for nine months, given the complete suspension of hotel units during the ongoing monsoon season, which has wreaked havoc in the state.
In a four-page letter addressed to the prime minister, the association also urged for flexible restructuring timelines, long-term hotel loans for 20 years, the reversal of excess interest and penal charges, and a restriction on asset downgrades without tangible collateral.
Himachal received 41 per cent excess rainfall from June 20 to September 25, and the state suffered losses of Rs 4,861 crore. The state witnessed 47 cloudbursts, 98 flash floods, and 148 major landslides and rain-related incidents, which have so far claimed 262 lives. The losses to the state were about Rs 10,000 crore in 2023, when over 550 people were killed during the monsoon season.
The association requested Modi to direct the Ministry of Finance, Reserve Bank of India, Ministry of Tourism, and the state Industries Department to strictly enforce RBI and Micro, Small, and Medium Enterprises (MSME) restructuring frameworks, halt SARFAESI actions, and ensure the sustainable revival of the tourism and hospitality ecosystem.
Under the SARFAESI Act, 2002, banks or financial institutions have the power to seize the property of a defaulting borrower classified as a Non-Performing Asset (NPA) and can also issue notices to the defaulting borrowers to discharge their liabilities within a 60-day period.
The tourism sector in Himachal Pradesh has suffered repeated and compounding setbacks over recent years due to natural disasters, economic disruptions, and regulatory lapses, and the hospitality sector is facing grave financial distress, FOHHRA president told PTI on Friday.
Himachal is a tourism-based economy, and a large number of people are connected with tourism, including hoteliers, transporters, shopkeepers, travel agents, guides, taxi drivers, photographers, and local vendors. Many small and medium operators have already shuttered, while others are struggling for survival, having taken loans for their businesses, he added.
The letter said that banks are charging interest rates as high as 15 per cent, which are unaffordable, and despite being registered MSMEs, borrowers are being subjected to SARFAESI proceedings, violating the spirit and stipulations of RBI’s and MSME’s restructuring policies.
Many borrowers are being forced to sell personal assets or take high-interest informal loans simply to remain compliant, and the frameworks for relief, which include refunding excess or penal interest, preventing asset downgrading due to restructuring, and providing restructuring through internal committees for loans up to Rs 10 lakh, are not being enforced, said the General Secretary of the association.
Source #ET
