3 min readNew DelhiSep 28, 2025 04:07 AM IST
First published on: Sep 28, 2025 at 04:07 AM IST
As the Ministry of Tourism marked World Tourism Day with a big event in New Delhi on Saturday, the Federation of Hotel & Restaurant Associations of India (FHRAI) addressed a gathering to draw attention to policy changes required to help the hospitality sector, especially in the wake of recent Goods and Service Tax (GST) rate changes.
Talking to reporters, Surendra Jaiswal, president of FHRAI, a body that represents over 1 lakh hotels and 5 lakh restaurants nationwide, called for immediate government action to safeguard the future of hospitality, a sector that directly and indirectly supports over 60 million livelihoods.
Jaiswal highlighted that 90 per cent of India’s hotels operate below a room tariff of ?7,500, and are now subject to a GST at 5% without Input Tax Credit (ITC).
“Although the recent revision in the GST rates is a continued effort to rationalise 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 said.
On behalf of hotels and restaurants, Jaiswal said 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.
A recent release by the Press Information Bureau, enlisting the benefit of GST rate reduction, taking Delhi as an illustrative example, had said that in 2024, Delhi’s hotel market recorded about 72.9% average occupancy with an average daily rate (ADR) of nearly ?10,273. The new GST rate of 5% for rooms below ?7,500/night directly reduces the cost of staying in Delhi’s hotels, the government release said. For example, booking a room at ?5,000 per night would now attract additional tax of only ?250 (5%). This makes hotel stays around 6.25% cheaper. These savings accumulate over a multiple-night stay which will result in higher occupancy rates.
To complement room-rate relief, key kitchen inputs used by hotels, restaurants, cafés, and caterers have also been cut from 18% to 5%. The 13% point tax reduction on these crucial kitchen supplies will directly lower the input costs for restaurants and hotels. This will help stabilise menu prices and improve the profitability of small and medium-sized eateries, PIB statement said. Jaiswal 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.”
A recent release by the Press Information Bureau, enlisting the benefit of GST rate reduction, taking Delhi as an illustrative example, had said that in 2024, Delhi’s hotel market recorded about 72.9% average occupancy with an average daily rate (ADR) of nearly ?10,273. 
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