Hoteliers Urge GST Revision for Restaurants within Hotels: HRAWI Appeals for Equal Treatment in Taxation

Hoteliers from the Western region, associated with the Hotel And Restaurant Association (Western India) or HRAWI, have appealed to the government for a revision in the GST structure for restaurants operating within hotels. They advocate for separating the GST rates on food and beverage services from those on hotel rooms to align the former with the 5% GST rate applicable to standalone restaurants, as opposed to the current 18% GST levied when linked with hotel room rates above Rs.7500.
In a letter to Finance Minister Nirmala Sitharaman, HRAWI outlined the issue where the GST on restaurant services inside hotels is influenced by the room tariff, specifically pointing out the disproportionate 18% GST applied to these services when room rates exceed Rs.7500. The association argues that this linkage unfairly burdens hotel restaurants, especially when compared to standalone establishments that offer similar quality dining experiences but are taxed less. They believe a uniform GST rate for all restaurant services, regardless of their location within or outside hotels, would level the playing field.
Highlighting the detrimental effect of the current GST structure, the HRAWI pointed out the difficulties it poses for larger hotel chains in attracting walk-in diners and the confusion it creates for banquet services. They emphasize the importance of equitable competition and the sustainability of the hospitality sector, advocating for GST uniformity to foster fair business practices across all food and beverage offerings.

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