BREAKING NEWS : HOSPITALITY SECTOR PINS HOPES ON GST COUNCIL MEET; FHRAI PITCHES FIVE-POINT REFORM AGENDA TO BOOST TOURISM COMPETITIVENESS

TTT NEWS NETWORK

NEW DELHI | 3 SEPTEMBER 2025

As the GST Council meets today, the Indian hospitality industry is hopeful that its long-pending submissions will finally be prioritised. The Federation of Hotel & Restaurant Associations of India (FHRAI), the apex body representing the sector, has urged the Government to act on a five-point reform agenda that it believes is critical to ease the tax burden, improve competitiveness, and unlock the full potential of Indian tourism.

FHRAI’s Five Key Demands:

1. Uniform 5% GST across all hospitality and tourism services: A single GST rate of 5% with Input Tax Credit (ITC) for restaurants, catering, bakeries, namkeens, and allied services will simplify compliance, lower costs, and bring India on par with Asian competitors.
2. Recognise hotel rooms as Plant & Machinery for ITC: Hotel rooms are the core revenue-generating assets. Renovations, refurbishments and capital upgrades should qualify for full Input Tax Credit (ITC). FHRAI has requested that hotel rooms be recognised as Plant & Machinery to encourage reinvestment, maintain quality, and boost revenue contributions to the exchequer.
3. Delink GST on food & beverage from room tariffs: Currently, GST on F&B services depends on the hotel room tariff. FHRAI has demanded this linkage be removed, citing revenue loss and operational inefficiencies for hotels.
4. Raise GST threshold for hotel room tariffs: Increase the current limit for charging 18% GST from ₹7,500 to ₹15,000. The ₹7,500 cap was set in 2017 when the exchange rate was ₹64 per USD. With today’s rate closer to ₹87 per USD, the threshold has depreciated in real terms, placing an undue burden on the industry.
5. Regularise past GST payments on an “as is” basis: Past confusion over “Declared Tariff” and the linking of F&B rates to room charges has triggered demand notices for hotels. FHRAI has urged the Government to accept past GST payments on an “as is basis”, pointing to precedents in other services.

Tourism already contributes more than 5% to India’s GDP and is a major employment generator, particularly for youth and women. Every rupee invested in hospitality yields ₹3.5 in output, while one direct job creates 3.2 indirect jobs. With GST rationalisation, FHRAI believes the sector could double its GDP contribution and play a pivotal role in achieving the Government’s Vision 2047 of a developed India.

“Tourism is not just about travel—it is a national growth engine with one of the highest multiplier effects in the economy. Rationalising GST is essential for making India globally competitive, affordable for travellers, and attractive for investors. With supportive policy measures, Indian tourism can double its contribution to GDP, create millions of jobs, and play a pivotal role in achieving the Government’s Vision 2047 of a developed India,” said K. Syama Raju, President, FHRAI.

FHRAI is also preparing for its 55th Annual Convention – “FutureScape 2047: Redefining Hospitality for a New Era”, scheduled in Bengaluru from 18th–20th September 2025, where GST reforms are expected to dominate discussions.

With the GST Council in session today, the hospitality sector is confident that its five clear demands—particularly lower GST, ITC recognition and tariff threshold revision—will be prioritised as part of India’s larger push to make tourism a world-class growth engine.