Quoting higher inflation, the Federation of Hotel and Restaurant Associations of India appealed to the GST council to rationalize the GST rates for the hospitality sector.
FHRAI indeed urged the government to acknowledge the update of simple GST rules to enable the establishments to come beneath the hospitality segment to claim the ITC.
The same is recommended that all F&B revenue of hotels be de-linked from their hotel room tariff slabs and permitted to impose the 5% GST excluding ITC beneath the composition scheme and 12% GST with the input tax credit.
“Similarly, for standalone restaurants, FHRAI has asked that two slabs of GST rates be maintained as stated above as was being done in the earlier Service Tax regime,”
FHRAI seeks a GST reduction on LPG used in hotels and restaurants from 18% to 5% to draw down the operational cost that would give an advantage to customers.
The federation indeed asked for either the GST removal on the payments of rent or be allowed Input credit on the payment of rent to absorb the increased inflation.
In March the wholesale price-based inflation increased to a four-month high of 14.55%, because of the rise in the price of the crude oil and the commodity costs, even though vegetables witnessed an easing of price pressures.
Under the government data related, WPI inflation has left in double digits for the 12th consecutive month starting from April 2021.
“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. For restaurants too, two separate GST slabs should be allowed; a composite slab rate at the present 5 per cent GST without ITC and the other at 10 per cent, FHRAI stated.”
The same is to be mentioned that the constant rise in the cost of the commercial LPG almost every month, fuel, oil, and mandate the commodities are interrupting the revenue.
“The industry is trying to overcome the crisis of over two years and is only trying to make a recovery. At such times, rationalising the GST rates for the industry could make a difference, stated Gurbaxish Singh Kohli, Vice President, FHRAI.”
FHRAI mentioned that after simplifying the limitations all over the world, GST in various countries that rely on FTAs shall be diminished. But the GST rates in India will continue to stay one of the highest in the world, making both domestic and inbound tourism expensive.
Kohli mentioned that “At present, the threshold limit of hotel room tariff with GST at 18 per cent is Rs 7,500. This needs to be increased to Rs 9,500. At the time when the threshold was fixed at Rs 7,500, the exchange rate of the dollar per rupee stood at Rs 64, but the same has breached Rs 76 per dollar today. Raising the threshold limit will bring parity of rates between the rupee and the dollar,”
