Hotels and restaurants seek urgent GST relief from Centre

Bengaluru,

Prices of commercial LPG cylinders have surged once again, placing a significant financial burden on hotels and restaurants. While consumers may experience only a marginal impact, the hospitality sector is bearing the brunt of the steep increase in fuel costs. On Saturday, the Karnataka State Hotels Association (KSHA) urged the Central Government to immediately slash the price of commercial LPG cylinders to the levels prevailing in February this year.

KSHA President G.K. Shetty said commercial LPG cylinders were priced at around Rs 1,800 in February, with dealer discounts bringing the effective cost for hotels down to Rs 1,650 - 1,700 per cylinder. He attributed the subdisruptions in global gas supplies caused by the U.S.-Iran war, adding that although supplies have gradually normalised, commercial LPG prices have remained significantly high.

Hotels and restaurants are now paying an exorbitant amount of Rs 3,198 per commercial LPG cylinder - nearly double what they were paying just a few months ago. The sharp rise in operating costs has left many small hotel owners struggling to sustain their businesses, while others are being forced to reassess their budgets and absorb the escalating expenses.

“We were paying around Rs 1,900 per commercial LPG cylinder earlier, but now we are paying nearly Rs 3,400, even though the official price is Rs 3,198, as even distributors have applied their additional charges. We are all waiting to see if there will be any relief after the price revision on July 1”, said Vijay, who owns a small hotel in Arekere Mico layout.

He said his establishment consumes nearly three LPG cylinders a day, making fuel one of its biggest operat ing expenses, alongside rent, employee salaries and the cost of ingredients. “Larger restaurants may be able to handle the increase, but smaller establishments like ours are the worst affected”, he said.

Echoing similar concerns, Arun Kumar Adiga, Managing Director of Vidhyarthi Bhavan, urged the government to intervene by reducing the Goods and Services Tax (GST) on commercial LPG cylinders. We have been requesting the government to reduce the GST on commercial LPG cylinders. If it does so now, it will provide much needed relief to the hospitality sector”, he said.

Adiga noted that while the increase in prices during the recent geopolitical conflict was understandable, the 18% GST remained within the government’s control. He pointed out that al though LPG supplies had been restored, prices continue to remain high. “If the GST is reduced from 18% to 5%, along with the discounts offered by distributors, the prices will become more manageable”, he said.

He further highlighted that “the hotel industry cannot claim Input Tax Credit (ITC), meaning it cannot offset the GST paid against its taxliability”.  Adiga said the lack of Input Tax Credit (ITC), coupled with the burden of paying higher GST, continues to add to the industry’s costs, and urged the government to intervene. Despite mounting costs, hoteliers say they have little choice but to adapt to remain competitive. “We have to keep going despite the rising prices; there is no other option. I am sure the government will come up with a solution and reduce the prices”, said Altaf Ahmed, owner of Shezan on Cunningham Road.