FHRAI has written to the Finance Minister, Nirmala Sitharaman to enhance the threshold limit for zero GST for hotel room tariffs from the present Rs.1000/- to Rs.2000/- per room per day. The Association has stated that the move will boost stays in the lower budget segment, which in turn will encourage more domestic travellers to venture out and thereby give tourism sector the much required boost. Increasing the threshold limit on zero GST will give hotels a chance to attract more tourists, thus increasing the chance of generating slightly better revenues. This could result in a multiplier effect for the Hospitality as well as the Tourism industry.
Gurbaxish Singh Kohli, Vice President, FHRAI, said, “There are quite a few budget hotels that offer accommodations in the Rs.2000/- tariff per day per room. Increasing the present zero GST threshold to Rs.2000/- will give these budget hotels a chance to revive business. The hospitality sector is engulfed in massive losses and mounting debts due to the pandemic and it is dealing with a very gloomy economic situation with no respite in near sight. This move will boost the lower budget hotel segment, which will encourage more domestic travellers to take vacations, aiding the tourism sector.”
The FHRAI in its pre-Budget memorandum had also requested for increasing the threshold limit of hotel room tariff charged at 18 per cent GST to be raised to Rs.9500/- from Rs.7500/-.
Kohli added, “The Hospitality sector is dealing with a very gloomy economic situation with no foreseeable respite. Being the first sector affected by COVID-19 and the last to revive, the Hospitality sector in the country is waging a battle for its existence. This unprecedented crisis has destroyed the entire Hospitality eco-system in the country which would take many years to recover. Therefore, only some extraordinary measures and support from the Government can save the industry at this time of deep crisis.”