VIJAYAWADA: Seeking restoration of Input Tax Credit (ITC), the Andhra Pradesh Star Hotels Association (ASHA) has submitted a detailed representation to Union Finance Minister Nirmala Sitharaman, urging the Centre to allow Input Tax Credit (ITC) at 5% GST for the tourism and hospitality sector — including hotel accommodation, food and beverage services, catering, restaurants and spa or wellness services.
ASHA President RV Swamy and Advisor Muttavarapu Murali Krishna met the Union Minister on Friday and explained that the hospitality sector is the major industry currently operating under GST without ITC benefits, despite being highly capital intensive with long gestation periods and comparatively low returns on investment.
They also explained that under the earlier 12% GST regime, hotels were able to offset 37% ITC, but the current 5% tax without ITC has led to a higher effective burden, increasing costs and impairing project viability.
The association warned that denial of ITC pushes up room tariffs and service prices, affecting affordability for the middle class and slowing demand growth.
It flagged the risk of informalisation, stating that lack of ITC discourages invoicing and could reverse gains made under GST in curbing the black economy.
Referring to the Union Budget, it pointed out that the Centre had allocated Rs 12,500 crore for developing 50 tourist cities and Rs 18,900 crore under the PLI scheme for tourism, underscoring the sector’s priority status.
The association said continuation of ITC denial is inconsistent with this vision.
It sought a two year transition window to use accumulated ITC from capital expenditure and requested delinking of hotel food and beverage GST from room tariffs.