The Federation of Hotel & Restaurant Associations of India (FHRAI) has urged the government to introduce income-tax incentives for new hotel projects and property expansions in Tier-II and Tier-III cities as part of Union Budget 2026. The association says the move would accelerate hospitality investments, create tourism-led infrastructure, and drive employment in emerging markets beyond major metros.
FHRAI officials submitted their proposals to the Ministry of Finance on Monday and are expected to meet Finance Minister Nirmala Sitharaman on November 20 to further advocate the sector’s demands.
A key recommendation includes extending infrastructure status to hotels and convention centres costing ₹10 crore and above, irrespective of city population size. FHRAI argues that current norms—which prioritise cities with over one million residents—exclude high-potential tourism hubs across the Northeast, Himalayan belt, pilgrim circuits, coastal destinations, and wildlife clusters.
The association also called for single-window clearance systems, extended license validity, and reclassification of hotels under plant and machinery for higher depreciation benefits. FHRAI says these measures would reduce project timelines and improve investor confidence.
Additionally, FHRAI sought budgetary support for destination marketing and improved regional air connectivity to unlock demand in underserved tourist regions.
