Give infra status to hotel projects of over Rs 25 cr: FHRAI

The hospitality sector has sought infrastructure status from the government for projects worth Rs 25 crore and above, the Federation of Hotels & Restaurants Association of India (FHRAI) has said.
In a memorandum to the government, it has also asked for a flat tax rate of 12 per cent on all the categories of hotels to encourage tourism-induced employment in the country.
Currently, there are four tax rates for hotels (0 per cent, 12 per cent, 18 per cent and 28 per cent) based on the declared tariff of rooms, FHRAI said in a statement yesterday.
"The tourism sector suffers from a gap in terms of world- class infrastructure development in the country's tourism destinations. This gap can be bridged by encouraging investments in hotel sector by giving infrastructure status for lower investments," FHRAI President Garish Oberoi said.

Moreover, no other nation has GST rate as high as 28 per cent on hotels and tourism, he said, adding that charging different tax rates on the nature of accommodation and destination may escalate a perception that India is not a tourist friendly nation.
The memorandum also asks government to treat all foreign exchange earnings as exports or deemed exports so that credit balance would be available for adjusting GST liability on domestic taxable supplies.
Regarding the restaurants, FHRAI said: "Restaurants should be given the credit for input services. Credit on inputs and capital items may be kept restricted."
FHRAI has also suggested that input credit be granted to hotel industry for any construction activities irrespective of it being capitalised in books.