The hospitality industry has renewed its call for a consistent 5% GST on hotel accommodations and meals, urging the GST Council to simplify the current slab structure, which industry representatives claim is outdated and causes operational confusion.
The Hotel and Restaurant Association of Haryana (HRAH) has raised the demand, which has asked for the removal of the existing Rs 7,500 room tariff threshold that determines GST rates for hotels. Currently, there is a 5% ITC on the hotel room costs with Rs 7500 and the rooms of more than the same limit are charged at 18% with ITC.
The association, the same dual-rate system, has directed to peculiarities, specifically in the taxation of food services. There is a 5% tax on the meals served in standalone restaurants, and the same food supplied via room service in higher tariff hotels draws 18% GST, which confuses guests and compliance issues for hotel operators.
As per Col. Manbeer Choudhary (Retd.), President of HRAH and former chief of the Federation of Hotel and Restaurant Associations of India (FHRAI), the tariff cap was fixed approximately 10 years ago and no longer shows the present-day costs.
Important: Revised GST Slab Rates in India by Council
He mentioned that room tariffs have surged due to inflation, rising input expenses and increased operational costs, which forces many mid-segment hotels into the 18% GST bracket.
A single 5% GST rate for rooms and meals across all hotel categories has been suggested by the hotel body, citing that the decision shall make travel cheaper, and also the occupancy in hotels will surge, and it will enhance India’s competitiveness as a tourist destination.
The GST rationalisation shall decrease disputes, ease billing and enhance the business operations in the hospitality sector, supporting the broader tourism and employment goals of the government, industry people assumed.