Bengaluru hotels are urging the government for GST relief as operational costs continue to climb. The hotel association has put forward two alternative proposals to ease the financial burden on the hospitality sector.
Proposed GST Options
The first option suggests retaining the current 5% GST on room tariffs and food services while allowing input tax credit (ITC). This benefit is already available for sweets and bakery items, and the association argues that extending it to hotels would provide much-needed support.
The second proposal calls for reducing the GST rate from 18% to 5% on key operational expenses such as commercial LPG, building rent, and kitchen equipment. Under this scenario, hotels would forego input tax credit, simplifying compliance while lowering upfront costs.
Industry Challenges
Rising costs of raw materials, energy, and rent have squeezed profit margins for hotels across Bengaluru. The association highlights that the current 18% GST on essential inputs like LPG and rent significantly adds to expenses, making it difficult for businesses to remain competitive.
By adopting either of the proposed measures, the government could stimulate growth in the hospitality sector, which is a major contributor to the local economy and employment.
The plea comes as the GST Council prepares for its next meeting, with industry stakeholders hopeful for a favorable decision.
