FHRAI Urges GST Council to Restore ITC, Warns of Cost Burden on Hotels

The Federation of Hotel & Restaurant Associations of India (FHRAI) has appealed to the GST Council to reconsider its recent decision to withdraw Input Tax Credit (ITC) on hotel room tariffs below ₹7,500 per night. While the tax rate was reduced from 12% to 5%, the removal of ITC means that hotels can no longer offset the GST paid on inputs, leading to increased operational costs. FHRAI warns that this move could financially strain small and mid-scale hotels, potentially affecting their sustainability and competitiveness in the global market. The association has recommended restoring ITC, delinking Food & Beverage services from room tariffs, and recognizing hotel rooms as "plant and machinery" for ITC eligibility on renovations.