FHRAI has submitted a comprehensive pre-budget memorandum encompassing direct tax and policy recommendations for the upcoming Union budget 2021–22.

The Federation of Hotel and Restaurant Associations of India (FHRAI), apex body of the Indian Hospitality industry, has submitted a comprehensive pre-budget memorandum encompassing direct tax and policy recommendations for the upcoming Union budget 2021–22. 

Specific to the business losses accrued due to COVID-19, the apex hospitality association has recommended a MAT waiver be given to the industry for a period of three years beginning  April 2021 to March 2024. 

The FHRAI has also requested for treating payments received from international tourists as foreign exchange for the purpose of EPCG scheme and that the time to perform export obligation under the scheme be extended by 5 years.

Being a highly capital intensive industry, it has asked to extend investment linked benefits from section 35 AD to on-going cap-ex of hotels and resorts to promote high quality brownfield cap-ex and capacity expansion.

“Over the last 8 months the Hospitality industry has been severely battered by the pandemic. The upcoming Union Budget will determine which way we go from here. The industry has a lot of expectations from the Government. Since the industry has not received much support so far, we are hoping that the upcoming Budget will have special focus on the hospitality industry and certain longstanding recommendations such as review of the Kamath Committee recommendations, industry and infrastructure status to Hotels, Resorts and Restaurants across the country, to raise threshold limit of hotel room tariff for charging GST, to allow IGST billing to hotels for corporate and MICE bookings will be addressed to rescue us from the downward spiral,” says Gurbaxish Singh Kohli, Vice President, FHRAI.

On the policy front, the FHRAI has demanded that hotels, resorts and restaurants need to be accorded industry status. It has asked that the Government classifies Hospitality under the RBI Infrastructure lending norm criteria for access to long term funds. The apex Association has also demanded that the Kamath Committee recommendations be reviewed for accommodating the Hospitality industry’s needs.

Pradeep Shetty, Jt. Hon Secretary, FHRAI, says, “Currently hotels built with an investment of Rs.200 crores or more have been accorded infrastructure status. This threshold has to be brought down to Rs.25 crores per hotel. This will enable hotels and restaurants to avail term loans at lower rates of interest and also have a longer repayment period. Giving Industry status to Hospitality sector is a must. Setting up a corpus fund for industry status to hospitality infrastructure will ensure its national industry status by compensating states for any losses.”

He added, “Also, the stringent conditions and the unrealistic parameters suggested by the Kamath Committee for restructuring of loan have made the restructuring plan unfavourable for the hospitality industry. The benchmarks suggested in the scheme are more stringent than what the banks used to offer to the industry in the original loans.”

Among other demands, the FHRAI has recommended enhancing funding limits to raise the SEIS rates to 10 per cent for hospitality industry to enhance the quality of accommodation and to enable discharging GST liabilities.

Kohli, Vice-President, FHRAI said that they hoped this year’s budget would take the Hospitality industry seriously as this budget can make or break their dream of Incredible India. He hoped that the Government considers this industry as an inclusive part of the economy, one which cannot be ignored.