Post Covid-19, GST has been reduced in most countries that depend on FTAs and GST rates in India being one of the highest in the world, makes both domestic and inbound tourism extremely expensive, said FHRAI.
New Delhi: With suggestions to rationalize the GST applicable for the hospitality sector Federation of Hotel & Restaurant Associations of India (FHRAI) on Monday submitted submitted a representation to the Finance Minister Nirmala Sitharaman. FHRAI said that the representation has been made for the consideration of the Group of Ministers (GoM) constituted by the GST Council to evaluate the present GST structure and submit recommendations to the Council.
It has stated that post Covid-19, GST has been reduced in most countries that depend on FTAs and GST rates in India being one of the highest in the world, makes both domestic and inbound tourism extremely expensive.
“At present, the threshold limit of hotel room tariff with GST at 18 per cent is Rs 7500. This will have to be increased to Rs 9500. At the time, when the threshold was fixed at Rs 7500, the exchange rate of Dollar per Rupee stood at Rs 64, but the same has reached at Rs.76 per dollar today. Raising the threshold limit will bring parity of rates between the Rupee and the Dollar. Also, the threshold limit for zero GST on hotel rooms should be increased from Rs 1000 to Rs 2000 per room per day,” says Gurbaxish Singh Kohli, vice-president, FHRAI.
FHRAI has requested all F&B revenue in hotels and standalone restaurants to be treated as bundled services to be charged GST. It has also requested valid GST hotel bills of any state other than the home state of the Individual assesse paid for by digital mode be exempt under section 80C for an additional amount of Rs 50,000.
“All F&B revenue should be delinked from any room tariffs if they are part of hotels allowing 5 per cent composite scheme for units that are not availing ITC and 12 per cent GST for units that are availing ITC. Simplification of GST rules will lead to greater compliance especially from small units. A mechanism should be in place to enable the establishments to avail input of GST paid on rent and other GST costs. This will make the businesses more viable, he added.
Among other important recommendations, FHRAI has urged a reduction in GST on LPG used in hotels from 18 per cent to 5 per cent to bring down the operational costs which will benefit customers. It has also asked for either the removal of GST on rent payments or be allowed input credit on rent payments.