India’s hotel industry is pushing back against recent changes to GST rates, saying they’re hiking costs for guests and squeezing smaller businesses in smaller cities. Surendra Kumar Jaiswal, the new president of the Federation of Hotel and Restaurant Associations of India (FHRAI), raised these concerns during the group’s 69th annual general meeting in New Delhi on Friday.
The government tweaked GST rates to simplify taxes, help consumers, boost compliance, and drive economic growth. But Jaiswal argues it’s backfiring for hotels. About 90% of India’s hotels charge less than Rs 7,500 per room, and now they face a flat 5% GST without Input Tax Credit (ITC). That means they can’t reclaim taxes paid on essentials like rentals, utilities, outsourced staff, and equipment.
“This setup is jacking up our unrecoverable costs and scaring off investments,” Jaiswal said. He warned it could hurt domestic tourism and slow the sector’s momentum.
FHRAI wants the government to bring back ITC right away and clear up confusion with a new circular. “Our hospitality industry creates tons of jobs and powers India’s service economy,” Jaiswal noted. “But without ITC, we’re losing our edge in the market. We’re not asking for handouts—just fair rules, clear guidelines, and equal footing.”
He also called for support to make the sector stronger, like fixing copyright issues and giving it official infrastructure status. That, he said, would help India become a top global tourism destination and align with the Viksit Bharat 2047 vision for a developed nation.
On top of GST woes, Jaiswal highlighted ongoing copyright headaches. Multiple royalty collection groups are hitting hotels and restaurants with overlapping demands for the same music or content, leading to legal battles and extra bills. FHRAI urges the government to spell out these groups’ roles, stop double-dipping on fees, and protect businesses from unfair lawsuits.
Speaking for over 100,000 hotels and 500,000 restaurants across India, FHRAI says these policy fixes are crucial to keep the hospitality sector thriving.
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