Hotel and restaurant owners in Kerala are up in arms over the state government’s imposition of GST on buildings they rent to run their businesses.

The stipulation that hotel owners  pay 18 per cent GST by hotel owners for their rented buildings will be detrimental to the industry as hotel owners have to pay an additional amount besides rent for the building, said G Jayapal, president, and KP Balakrishna Poduval, general secretary of Kerala Hotel & Restaurant Association, at a press meet.  

They pointed out that the authority’s claim on reimbursement of GST amount through input tax credit as per GSP Reverse Mechanism would be difficult to meet. This is because the restaurant sector could not claim input tax. Because of the government directive, the association said that small and medium-sector players are face major financial burdens .

Besides, traders in other sectors have to pay only one per cent GST under the composite scheme, while hotel owners pay a five per cent tax. Moreover, they are not eligible to receive any incentives under MSME rules, the association said.

According to KHRA, the majority of hotels and restaurants in Kerala operate on a rental basis, and the imposition of GST will put them under severe financial crises. This, coupled with the price increase of essential commodities and other crisis has led to the closure of around 3,000 hotels in the last three months, the association said.

The decision to hike LPG prices by around Rs150 in the last two months by oil marketing companies impacted the profitability of hotels. The rise in import duty on edible oils is also hurting the sector badly, they added.

The Association is going ahead with agitation plans by organising a Raj Bhavan march on November 7, demanding the withdrawal of GST on building rent, and proposing  a Parliament march in December. There will be protest meetings before GST offices in each district on November 12

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