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

The Federation of Hotel & Restaurant Associations of India (FHRAI) has urged the GST Council to restore Input Tax Credit (ITC) for hotels following its withdrawal for room tariffs below ₹7,500 per night. While GST on such rooms was reduced from 12% to 5%, the removal of ITC has increased operational costs for hotels, particularly small and mid-sized establishments, which may struggle to remain financially sustainable. FHRAI highlighted that the inability to claim ITC on inputs and renovations could reduce competitiveness, ultimately affecting tourism and the hospitality sector’s growth. The association recommended measures including restoring ITC, treating hotel rooms as “plant and machinery” for renovation-related ITC claims, and separating Food & Beverage services from room tariffs for tax purposes. FHRAI emphasized that the ITC restoration is essential to prevent passing higher costs onto customers and ensuring the continued viability of the hospitality industry in India.