FHRAI seeks 5 pc GST with input tax credit for tourism sector

New Delhi, Aug 21 As the Centre prepares to revamp GST rates, the Federation of Hotel & Restaurant Associations of India (FHRAI) has urged Finance Minister Nirmala Sitharaman to implement a uniform 5 per cent GST rate with input tax credit to make tourism affordable.

The FHRAI argued that India’s GST rates are higher than Asian peers like Thailand and Singapore, where rates are as low as 6 to 10 per cent. India’s higher GST structure reduces affordability and weakens its appeal for international travellers, it said.

"The appeal to cut rates seeks to position Indian tourism as a driver of economic growth while enhancing its global competitiveness in alignment with India’s Vision 2047," the industry body said in a release.

A uniform GST rate of five per cent with input tax credit across all hospitality and tourism services would ease compliance and reduce the cost burden for both domestic and international travellers, it said.

The association has also called for doing away with the linking of GST on food and beverage services from hotel room tariffs, pointing out that the current linkage creates operational inefficiencies and revenue losses for hotels.

Further, it requested that past GST payments be regularised on an "as is" basis to address demand notices arising from earlier ambiguities in the interpretation of tariff values and service classifications.

FHRAI claimed that the ratification of GST could double tourism’s current contribution of 5 per cent to India's GDP and create immense jobs.

The tourism sector remains one of the largest employment generators, offering extensive opportunities for youth and women, with its high multiplier effect, where every rupee invested in hospitality generates a return of Rs 3.5 in output, while one direct job in the sector creates an additional 3.2 indirect jobs, the release said.

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