Hospitality Industry Seeks GST Reform on Food & Beverage Services

The Federation of Hotel & Restaurant Associations of India (FHRAI) is advocating for a change in the GST structure on food and beverage services within hotels, suggesting the delinking from room tariffs to allow more operational flexibility and fairness in the hospitality sector.

The Federation of Hotel & Restaurant Associations of India (FHRAI) has called for a revamp in the Goods and Services Tax (GST) framework concerning food and beverage services in hotels. The association emphasized that the current linkage of F&B taxation to hotel accommodation charges is unfair and complicates operational processes.

Presently, hotels with room charges of Rs 7,500 or more must charge 18% GST on F&B services, benefitting from input tax credit (ITC), whereas those below the threshold charge 5% without ITC. FHRAI proposed allowing hotel restaurants to freely choose between both GST rates, regardless of room costs.

According to FHRAI Vice President Pradeep Shetty, the organization seeks to either remove the GST linkage or increase the Rs 7,500 threshold to Rs 12,500, taking inflation since 2017 into account. This change aims to provide equitable tax conditions for all hotels.