FHRAI Advocates for Simplified GST Rules to Ease Financial Strain on Hotels and Restaurants

FHRAI’s Push for a Simplified GST Framework in Hospitality

The Federation of Hotel & Restaurant Associations of India (FHRAI) has put forward significant proposals aimed at streamlining the Goods and Services Tax (GST) system for the hospitality industry. Central to these proposals are three key demands: regularising past GST disputes, restoring the Input Tax Credit (ITC) benefits for hotels, and separating the GST treatment of Food & Beverage (F&B) services from hotel room tariffs. These changes are expected to bring much-needed clarity and relief to hotels and restaurants grappling with complex tax compliance issues.

Addressing Legacy GST Disputes under Section 11A

One of FHRAI’s primary appeals is for the government to activate Section 11A of the CGST Act, 2017, which provides a mechanism to regularise outstanding GST issues that have led to a series of demand notices. According to FHRAI, many disputes arise from ambiguities rather than deliberate tax evasion. Issues often stem from a misunderstanding between the “declared tariff” and actual “transaction value,” or ambiguous interpretations of terms like “specified premises.”

Moreover, some hotels have been unfairly targeted based on inflated tariffs displayed by online travel agencies (OTAs), while actual payments were made under lower GST slabs. FHRAI urges the authorities to settle these disputes as they stand, and to clarify cases where no service was delivered or no payment received, helping reduce unnecessary litigation and business uncertainty.

Restoring Input Tax Credit to Support Mid-Segment Hotels

The withdrawal of ITC benefits following GST rate adjustments has dealt a blow to many mid-tier hotels. Currently, rooms priced under INR 7,500 attract a 5% GST rate but without ITC eligibility. FHRAI highlights that this removes the seamless flow of credit and increases operational costs, squeezing profitability.

To address this, the association suggests reinstating ITC for the 5% GST rate and classifying hotel rooms as “plant and machinery” to qualify for ITC. FHRAI also recommends raising the price threshold from INR 7,500 to INR 12,500 to better match inflation and currency depreciation since 2017. This adjustment would ease financial pressure on hotels and improve competitiveness in the hospitality market.

Delinking F&B GST from Room Tariffs for Pricing Flexibility

FHRAI proposes an independent GST structure for hotel restaurants, separate from room tariffs. Under the current system, hotels charging above INR 7,500 levy 18% GST with ITC for F&B, while those below charge 5% without ITC. This linkage restricts pricing freedom and complicates compliance.

The recommendation is to allow restaurants within hotels to opt for either 18% GST with ITC or 5% without ITC, regardless of the room tariff. According to research by FHRAI’s Centre of Excellence for Research in Tourism & Hospitality (CERTH), such a change could increase annual GST collections by more than INR 4,000 crore through greater flexibility in tariff structures.

Potential Impact on Hospitality and Transfers

These reforms could reshape the financial landscape for hotels and their affiliated services, including airport transfers and chauffeur-driven car bookings. Hotels with restored ITC and simplified GST processes could reduce overhead costs, potentially passing savings onto travelers. For platforms like GetTransfer.com, which connects users with driver services and private car rentals, this means a better, more financially stable ecosystem where operators can offer competitive fares and maintain high service standards.

Table: Key FHRAI GST Proposals at a Glance

Industry Voices and Forward Outlook

Surendra Kumar Jaiswal, President of FHRAI, voiced that the hospitality sector is a steadfast contributor to India’s economic growth. Still, inconsistencies and complexities in the GST system pose avoidable challenges. He stressed that aligning GST policies with business realities will restore confidence, reduce disputes, and support the government’s vision of Viksit Bharat @ 2047 — a progressively competitive tourism destination.

Why This Matters for Travelers and Taxi Services

For travelers, a healthier hospitality industry means more competitive pricing and better service quality, including transfers between airports, hotels, and city destinations. Customers who use services like GetTransfer.com can benefit indirectly as the smoother GST framework encourages hotels and associated transport services to maintain transparent pricing and dependable service. The ability to book private cars or limousines with confidence, knowing that the overall hospitality ecosystem is thriving, adds peace of mind to any journey.

The Value of Personal Experience with Verified Providers

While reports and reviews offer valuable insights into GST reforms and their impact, nothing beats firsthand experience. On GetTransfer, travelers can hire a car with driver from verified providers at reasonable prices, eliminating guesswork and disappointment. With a wide range of vehicle choices and additional service options, users enjoy convenience, affordability, and the transparency of pricing before booking.

预订 GetTransfer.com to ensure that your transfer needs are met with professionalism and clarity.

Conclusion: Navigating Hospitality Changes with Confidence

The FHRAI’s recommendations for rethinking GST dues, ITC policies, and F&B taxation hold promise for revitalizing India’s hospitality sector. Simplified taxation will likely ease financial burdens on hotels and restaurants, encouraging growth and fair competition. This, in turn, benefits travelers by fostering more reasonable fares and better options for airport and city transfers.

GetTransfer.com aligns with this evolving landscape by offering users a transparent, easy-to-navigate platform where every car, fare, and driver rating is visible upfront—empowering informed choices anywhere in the world. From private sedans to spacious multi-seaters, GetTransfer supports seamless travel experiences across destinations.

通过 GetTransfer 开始计划您的下一次探险，并确保您的全球接送服务。