The Andhra Pradesh Star Hotels Association (ASHA) has formally appealed to Union Finance Minister Nirmala Sitharaman to reinstate input tax credit (ITC) for hotels and tourism services under the existing 5% GST slab, arguing the move will ease operating costs and curb price inflation for consumers.
ASHA President R.V. Swamy and Adviser M.V. Murali submitted the representation Friday in Amaravati, outlining the loss of input set-off under the 5% non-ITC regime, which the association says is eroding margins, raising room and F&B pricing, and discouraging fresh investments.
The delegation highlighted that under the previous 12% GST bracket, hotels absorbed 5–7% of tax incidence after availing 3–7% ITC on inputs. The current 5% GST without ITC has removed the credit mechanism, driving up procurement, food, spa, and wellness service costs, inevitably translating into higher tariffs and weaker demand.
ASHA also proposed a two-year transitional window to adjust accumulated ITC balances, should ITC under 5% remain disallowed. Additionally, the body urged the Centre to decouple GST on hotel food and beverages from room tariffs, a structural change it claims could lift sector revenue and strengthen tax collections while supporting long-term market stability.
Hospitality leaders warn that continued ITC denial will impact occupancy trends, raise service pricing, and slow new project viability in one of India’s fastest-growing leisure markets.
Source : The Hindu
