Navratri travel made sweeter:Hotel stays cheaper, but hoteliers unhappy over misapplication of GST slabs; what to do if you are overcharged

With the festive travel season now underway, consumers booking hotel rooms will get significant financial relief under the new GST rates rolled out on Monday. However, they should remain mindful of the charges and ensure that hotels are correctly applying the revised rates. According to Alay Razvi, Managing Partner at Accord Juris, if a hotel or shop fails to apply the notified GST rates correctly, guests can lodge a complaint through the National Consumer Helpline (toll-free 1915), the INGRAM online portal, or the GST grievance portal. These platforms issue a complaint number with digital tracking, and while resolution may take a few weeks, online complaints are often acted upon more swiftly. However, Razvi cautioned that the more frequent challenge lies in misapplication of GST slabs and lack of itemised invoices, which can lead to inflated bills. “The safest way for guests is to always insist on a detailed bill and be aware of the GST rate applicable to their room category,” he said. At the same time, Shashank Shekhar, Partner at DMD Advocates, pointed out that the anti-profiteering provisions under GST, which previously allowed consumers to challenge hotels for not passing on tax benefits, ceased to operate from April 1, 2025. “Unlike earlier, consumers no longer have a statutory avenue to lodge profiteering complaints against hoteliers or shop owners. However, the government has assured that the industry will pass on the benefits of rate reductions to consumers and has also said that compliance will be closely monitored through robust data analytics,” Shekhar explained. ITC Segregation Challenges for Hotels According to CA Deep Koradia, currently, hotel owners face challenges when selling rooms both above and below ₹7,500. Industry Concerns: FHRAI’s Stand While the recent GST Council decision to reduce tax on hotel rooms priced below ₹7,500 from 12% to 5% appears consumer-friendly, the Federation of Hotel Restaurant Associations of India (FHRAI) has raised objections to the simultaneous withdrawal of Input Tax Credit (ITC). According to FHRAI: The Road Ahead CA Ashish Niraj, Partner at ASN Company, explains: “In most cases where the output GST rate is 5%, input credit is not allowed. This is because GST works on value addition — which becomes the government’s net revenue. “For example, if the output tax is ₹18 and the input tax is ₹10, the net GST paid to the government is ₹8. But if the output tax rate is reduced to 5%, the government only gets ₹5, with no input allowed. “If input credit were also allowed on 5% output, then with input at ₹10 and output at ₹5, the government would effectively receive nothing, causing a revenue loss. “That’s why, although many sectors are demanding input credit on 5% output cases, the likelihood of the government agreeing is very low.”