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Hospitality body FHRAI lobbies for bringing travel aggregators under GST

Our Bureau Bengaluru | Updated on September 30, 2021

More than 40% of the room inventory listed on OTA platforms is operating illegally without valid licenses from local and State authorities, claims FHRAI

Federation of Hotel and Restaurant Associations of India (FHRAI) has submitted a representation to the Finance Minister, Nirmala Sitharaman requesting to bring Online Travel Aggregators (companies aggregating hotel bookings) under the GST coverage.

Founded in 1955, The Federation of Hotel & Restaurant Associations of India (FHRAI) is a body of the Indian Hospitality industry. The association has recommended that bringing OTAs under the GST provision will end tax evasion by thousands of illegal accommodation units listed on the OTAs and benefit the exchequer.

“More than 40 per cent of the room inventory listed on OTA platforms is operating illegally without valid licenses from local and State authorities. These accommodation units operate unlawfully under the veil of B&Bs and Homestays and are being helped by OTAs who list their inventory without any approvals or checks. This not only harms law abiding players but such indiscriminate hosting encourages illegal activities, non-compliance of statutory rules and regulations and compromises guest safety, not to mention posing a grave security threat as there are no checks or verifications for the guest. A majority of them don’t hold any valid statutory licenses such as GSTN,” said Gurbaxish Singh Kohli, Vice-President, FHRAI.

Also read: Indian hospitality industry records lowest revenue per available room of last 22 years

Level playing field

“To ensure a level playing field in the hospitality sector as well as to stop the massive revenue loss to the economy, replicating the initiative of making GST applicable to FSAs for OTAs will make a huge difference. We request the Hon’ble Finance Minister to consider our recommendation and ensure that OTAs too pay GST for the accommodation units registered with them to avoid revenue leakage,” Kohli added.

The association has also welcomed the decision of the GST Council to treat Food Delivery Apps such as Zomato and Swiggy as restaurants and levy 5 per cent GST on supplies provided by them. FHRAI has stated that this move will plug tax evasion by unregistered restaurants benefiting the national exchequer.

The hosptality body estimates that the recent move to bring FSAs under GST will prevent tax loss of around ₹2000 Cr caused due to underreporting by the aggregators. It further estimates that tax loss through GST evasion by illegally listed entities on OTAs is more than double that of the FSAs.(food delivery apps)

Published on September 30, 2021

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