Hoteliers in Karnataka Cite Soaring Costs, Unable to Pass on GST Benefits
Bengaluru: The Karnataka State Hoteliers’ Association has stated that restaurants and hotels across the state are unable to reduce prices for consumers despite recent GST cuts on certain items, citing unaddressed operational costs like high taxes on cooking gas and commercial rents.
The association welcomed the government’s recent GST reductions but clarified that the hospitality sector is constrained from offering similar relief. Association President G. K. Shetty explained that while customers are inquiring about lower food and room tariffs, the financial burden on hoteliers remains significant.
Unchanged Input Costs Squeeze Margins
Shetty pointed out that key operational expenses continue to attract an 18% Goods and Services Tax. “The 18% GST on cooking gas cylinders has remained untouched. In addition, hoteliers who run their business from rented buildings are paying 18% GST on the rent they pay,” he stated. A majority of establishments operate from rented properties, making this a substantial fixed cost. 
Appeal for Rent GST Reduction
The association has appealed to the government for relief, specifically requesting a reduction in the GST levied on property rent. Shetty argued that this step is crucial for the survival of many businesses. “If the GST is reduced to 5% on rent, then we can pass on the benefits to our consumers. With the present GST rate, it is not possible for us to offer any relief,” he said. The hoteliers contend that only with such a measure would they be in a position to consider reducing prices for the public.
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