India's hotel industry association challenges recent tax policy changes affecting accommodation providers nationwide. The Federation of Hotel and Restaurant Associations of India opposes removing input tax credits despite lowering rates to five percent for rooms under Rs 7,500. Small and medium hotels face severe financial strain from this decision, according to industry representatives. Previous twelve percent rates allowed credit recovery for operational expenses paid at eighteen percent rates. The association warns this shift threatens sector stability and growth prospects.
Hotels cannot claim refunds on rental payments, staff costs, utilities, and property improvements under revised regulations. Renovation projects worth Rs 1 crore generate additional Rs 18 lakh tax burdens without recovery options. The industry group demands food services be separated from room pricing structures to reduce compliance complications. Association leaders propose recognizing hotel facilities as manufacturing equipment to restore renovation credits. They seek raising the eighteen percent tax threshold from Rs 7,500 to Rs 12,500 to maintain global competitiveness.
Hotels cannot claim refunds on rental payments, staff costs, utilities, and property improvements under revised regulations. Renovation projects worth Rs 1 crore generate additional Rs 18 lakh tax burdens without recovery options. The industry group demands food services be separated from room pricing structures to reduce compliance complications. Association leaders propose recognizing hotel facilities as manufacturing equipment to restore renovation credits. They seek raising the eighteen percent tax threshold from Rs 7,500 to Rs 12,500 to maintain global competitiveness.
