Restaurant India News: Hospitality Sector Pushes for 5 Percent GST to Compete Globally

The Hotel and Restaurant Association of Western India (HRAWI) has approached the Finance Minister and the GST Council, requesting a review of the current tax structure in the hospitality and tourism industry. The Association has emphasized that India’s tourism sector, which contributes close to 5 percent of the country’s GDP and stands as a major employment generator, is at a disadvantage due to higher GST rates compared to countries such as Thailand, Indonesia, Singapore, Vietnam, and Malaysia.

The representation submitted by HRAWI calls for a uniform 5 percent GST rate with Input Tax Credit (ITC) across all segments of hospitality and tourism services. This includes restaurants, bakeries, namkeen manufacturers, catering (both indoor and outdoor), and other allied services. According to the Association, such a move would simplify compliance, bring down costs for consumers, and strengthen competitiveness in the global market.

The Association has also asked the Government to delink GST on food and beverage services from room tariffs and to settle previous GST payments on an ‘as is’ basis. This, it believes, will help address several long-standing challenges faced by the industry.

“HRAWI has submitted a representation to the Hon’ble Finance Minister and the GST Council urging rationalisation of GST in the hospitality and tourism sector. India’s tourism industry, which contributes nearly 5 per cent to the nation’s GDP and is among the largest generators of jobs, continues to be disadvantaged by high GST rates compared to its South-East Asian competitors including Thailand, Indonesia, Singapore, Vietnam and Malaysia. For this, we have requested the Government to consider a uniform 5 per cent GST rate with Input Tax Credit (ITC) across all hospitality and tourism services, including restaurants, bakery, namkeens, outdoor/indoor catering and allied services to simplify compliance, improve affordability and enhance competitiveness for Ease Of Doing Business. Additionally, we have recommended delinking GST on F&B services from room tariffs and to regularise past GST payments on an ‘as is basis’ to resolve long-standing industry challenges. These measures will not only boost tourism inflows but also align with the Hon’ble Prime Minister’s vision of Viksit Bharat 2047, by positioning tourism as a key growth engine, cultural ambassador and source of inclusive employment. Rationalisation of GST is a vital step towards unlocking the full potential of India’s hospitality sector and ensuring its rightful place on the global stage,” says Pradeep Shetty, Hotel And Restaurant Association (Western India) – HRAWI.

Industry experts believe that lowering GST to a uniform 5 percent could make India a stronger player in global tourism, encourage higher inflows, and contribute significantly to job creation and economic growth.