GST Without ITC Undermines Affordability and Accessibility in India’s Tourism Sector, Says FHRAI

New Delhi, 27th September 2025: On the occasion of its 69th Annual General Meeting, the Federation of Hotel & Restaurant Associations of India (FHRAI), representing over 1 lakh hotels and 5 lakh restaurants nationwide, convened a specially organised press meet at Le Meridien, New Delhi, to draw urgent attention to the policy challenges confronting India’s hospitality sector. The briefing was led by Mr. Surendra Kumar Jaiswal, the newly elected President of FHRAI, who outlined his vision for strengthening the industry and called for immediate government action to safeguard the future of hospitality, a sector that directly and indirectly supports over 60 million livelihoods.

In his address, Mr. Jaiswal highlighted that 90% of India’s hotels operate below a room tariff of ₹7,500, and are now subject to a Goods and Service Tax (GST) at 5% without Input Tax Credit (ITC). Although the recent revision in the GST rates is a continued effort to rationalize tax rates in order to benefit consumers, improve compliance, and support growth, it, he noted, has turned into an added cost for guests and created structural cost burdens on hotels, particularly in Tier II and Tier III cities. He stressed that the withdrawal of ITC has escalated unrecoverable costs on rentals, utilities, outsourced manpower, and capital expenditure, deterring investments and threatening the growth of domestic tourism. FHRAI called for reinstating ITC at the earliest and issuing a clarificatory circular to remove compliance ambiguities.

Beyond GST, Mr. Jaiswal also addressed persistent issues of copyright harassment, where multiple societies raise overlapping royalty demands, creating unjustified legal and financial pressures on hotels and restaurants. He urged the government to define the roles of copyright societies clearly, prevent multiple collections for the same content, and shield establishments from wrongful litigation.

A major part of FHRAI’s vision, as outlined by Mr. Jaiswal, is to secure both Infrastructure Status and full Industry Status for hospitality, which would unlock low-cost credit, encourage balanced regional development, and boost investments in smaller towns and cities. He also reiterated the need for ease of doing business reforms, including streamlined licensing norms and the implementation of a Single Window Clearance System.

Mr. Jaiswal reiterated that the hospitality industry, at its core, is not just about hotels, restaurants, and tourism; it's about the people. It is the collective effort of all the stakeholders and contributors that makes the industry unique. He acknowledged the contributions of farmers by calling them the backbone of industry and announced that during his tenure as President of FHRAI, his best efforts would be to bring the industry closer to the farmers so as to support their socio-economic growth.

Speaking at the press briefing, Mr. Surendra Kumar Jaiswal, President of FHRAI, said, “Our industry is one of the largest generators of employment and a key driver of India’s service economy. Yet, the GST framework without ITC has created inequities that threaten our competitiveness. We are not seeking concessions but fairness, clarity, and parity. By restoring ITC, addressing copyright ambiguities, and granting Infrastructure and Industry Status, the government can empower hospitality to support the vision of Viksit Bharat 2047 and secure India’s rightful place as a global tourism hub.”

The press meet concluded with FHRAI’s strong appeal to the government for urgent corrective measures, stressing that without decisive action, the sector risks losing competitiveness, investment, and its ability to contribute to India’s growth story.