'GST without ITC hits affordability and accessibility in India’s tourism sector'

The recent revision in the GST rates is a continued effort to rationalize tax rates to benefit consumers, improve compliance, and support growth, but the same has turned into an added cost for guests and created structural cost burdens on hotels, particularly in Tier II and Tier III cities, Surendra Kumar Jaiswal, the newly elected President of Federation of Hotel and Restaurant Associations of India (FHRAI) said.

As much as 90 per cent of India’s hotels operate below a room tariff of Rs7,500, and are now subject to a Goods and Services Tax (GST) at 5 per cent without Input Tax Credit (ITC).

He stressed that the withdrawal of ITC has escalated unrecoverable costs on rentals, utilities, outsourced manpower, and capital expenditure, deterring investments and threatening the growth of domestic tourism.

FHRAI requested that the government reinstate ITC at the earliest and issue a clarificatory circular to remove compliance ambiguities.

“Our industry is one of the largest generators of employment and a key driver of India’s service economy. Yet, the GST framework without ITC has created inequities that threaten our competitiveness," said Jaiswal.