**Meta:** FHRAI advocates for delinking GST on food and beverage services from hotel accommodation charges.
**Content:**
### FHRAI Proposes Changes to GST Structure for Hospitality Sector
**Who:** The Federation of Hotel & Restaurant Associations of India (FHRAI)
**What:** Advocating for the separation of GST on food and beverage services from hotel accommodation charges
**When:** March 9
**Where:** New Delhi
**Why:** To address the unfair and operational challenges posed by the current GST framework
The FHRAI has called for a revision in the Goods and Services Tax (GST) structure that currently links food and beverage (F&B) taxation to hotel room tariffs. This request comes after multiple representations made to the authorities, highlighting the operational difficulties faced by the hospitality industry.
### Current GST Framework
– Hotels charging ₹7,500 or more per room per day are subject to an 18% GST on F&B services, with input tax credit (ITC) benefits.
– Hotels with room tariffs below ₹7,500 must charge a 5% GST on F&B services without ITC.
### Proposed Changes
FHRAI has suggested a more flexible system that would allow all hotel restaurants to choose between:
– 18% GST with ITC
– 5% GST without ITC
This proposal aims to eliminate the current threshold of ₹7,500, which causes a significant tax increase for restaurants within hotels when room rates exceed this amount. Pradeep Shetty, Vice President of FHRAI, stated, “With regard to our request of delinking this particular GST which is the threshold of ₹7,500… the moment a hotel sells a room above ₹7,500, the GST rate for the restaurant within the same hotel moves from 5% to 18%.”
### Suggested Adjustments
– FHRAI has also proposed either removing the linkage entirely or increasing the threshold from ₹7,500 to ₹12,500, considering inflation since the benchmark was first established in 2017.
**Conclusion:** How will these proposed changes impact the hospitality industry and its pricing strategies?
**FAQs:**
**Q: What is the current GST rate for food and beverage services in hotels?**
A: Hotels charging ₹7,500 or more per room per day are subject to an 18% GST, while those below this threshold must charge 5% GST without ITC.