Karnataka Hotels Association seeks GST cut on commercial LPG cylinders to 5pc

The demand comes in the wake of a steep hike of Rs 993 per 19-kg commercial LPG cylinder on Friday.

Bengaluru: The KSHA on Saturday, May 2, urged the government to immediately reduce GST on 19-kg commercial LPG cylinders from 18 to 5 per cent.

Meanwhile, the Bangalore Hotels Association (BHA) has separately written to Prime Minister Narendra Modi requesting his intervention to roll back or reduce the recent LPG price hike, rationalise GST rates on commercial LPG to bring them on par with domestic LPG at 5 per cent, and ensure uninterrupted and adequate supply of LPG to the hospitality sector.

The demand comes in the wake of a steep hike of Rs 993 per 19-kg commercial LPG cylinder on Friday, marking the third consecutive monthly increase due to rising global energy prices linked to the West Asia conflict.

G K Shetty, President of Karnataka State Hotels Association, said in a statement that the total increase of Rs 1,308 in the past 60 days, announced by oil marketing companies, is among the sharpest in recent times.

He said prices have risen from the Rs 1,800–Rs 2,000 range in March to over Rs 3,100 now, representing an increase of 50 per cent to 70 per cent within 60 days, depending on the base city and timing.

“If immediate corrective measures are not taken, businesses will have no option but to pass on the increased costs to consumers, making eating out more expensive and affecting overall demand,” he said.

He highlighted that the hotel and restaurant industry is facing an unprecedented crisis triggered by global disruptions, including the ongoing conflict, which has severely impacted supply chains.

The shortage of commercial LPG, coupled with steep price increases, has significantly escalated operational costs for hotels and eateries across the state.

“The recent hike in commercial LPG prices will further intensify inflationary pressures,” Shetty said.

He noted that the hospitality sector, still recovering from setbacks in recent years, is now grappling with multiple challenges. In addition to rising fuel costs, businesses are burdened with local levies such as garbage collection charges in Bengaluru and other regulatory expenses.

These cumulative pressures have already forced several small and medium establishments to shut down, while many others are struggling to sustain operations.

KSHA emphasised that reducing GST on commercial LPG is a critical step to contain the cascading effect of rising costs across the value chain.

Lower taxation would provide immediate relief, help stabilise prices, and protect both businesses and consumers from further financial strain.

It urged the government to immediately reduce GST on 19-kg commercial LPG cylinders from 18 per cent to 5 per cent and called upon both the state and central governments to act swiftly and decisively.

“The hospitality industry is a major contributor to employment and the economy. Supporting this sector during such challenging times is essential to ensure its survival and long-term sustainability,” Shetty said.

KSHA reiterated its commitment to working with policymakers to find viable solutions but stressed that urgent intervention is necessary to prevent further closures and economic distress in the sector.

In its letter to the Prime Minister, BHA stated that the price of commercial LPG cylinders has witnessed an “unprecedented” hike of Rs 991.

It noted that commercial LPG is taxed at 18 per cent, whereas domestic LPG is taxed at 5 per cent. This disparity, it said, puts hotels and restaurants at a disadvantage despite being essential service providers and major contributors to employment and the economy.

“The situation is worsened by ongoing gas supply shortages, making it increasingly difficult for establishments to operate smoothly. Many small and medium hotels are already struggling to survive due to rising input costs,” BHA added.

Highlighting that the hotel industry is a major employer and plays a vital role in tourism and economic growth, BHA warned that without timely support, the situation could lead to closures, job losses, and reduced service capacity.

“We hope that the Government will consider our concerns and take necessary steps to provide relief to the hospitality sector,” BHA said, also seeking an appointment with the PM to explain the industry’s difficulties.