AP Chambers Seeks GST Cut on Commercial LPG for Hospitality Sector

Vijayawada: The Andhra Pradesh Chambers of Commerce and Industry Federation (AP Chambers) has urged the Centre to reduce Goods and Services Tax (GST) on commercial LPG cylinders used by the hospitality sector from 18 per cent to 5 per cent, citing mounting financial stress on hotels and restaurants, particularly the MSME establishments.

In a representation submitted to Union finance and corporate affairs minister Nirmala Sitharaman, AP Chambers said the steep and continuous increase in commercial LPG prices had severely impacted the viability of budget and mid-segment hotels and restaurants across Andhra Pradesh and the country.

According to the AP Chambers, the price of a 19-kg commercial LPG cylinder in Andhra Pradesh has risen to nearly `3,200 following the latest revision that came into effect on May 1, 2026. It said the cumulative increase in cylinder prices over the past four months alone was around `1,500 per cylinder.

AP Chambers president Potluri Bhaskara Rao said commercial LPG had become one of the largest operational expenses for hotels and restaurants, placing the hospitality sector under tremendous pressure.

The AP Chambers estimated that recent LPG price hikes alone had imposed an additional monthly burden ranging from Rs 90,000 to Rs 1.5 lakh on mid-sized hotels. It noted that many hotels and restaurants currently fall under the 5 per cent GST category without effective input tax credit benefits, while commercial LPG continues to attract 18 per cent GST, resulting in an inverted tax structure.

AP Chambers said rising LPG prices, coupled with increasing food ingredient and raw material costs, had pushed operational expenses higher by nearly 25 per cent for several hospitality establishments.

It also expressed concern that many restaurants were operating with restricted menus and reduced operational flexibility, while smaller establishments were reportedly facing the threat of closure due to unsustainable business conditions.

Highlighting the hospitality sector’s contribution to employment generation and allied industries, the Chamber said hotels and restaurants played a key role in supporting tourism, transport, logistics, food processing and event management sectors.

Urging the Union government to consider the request favourably, AP Chambers said reduction of GST on commercial LPG cylinders would provide immediate operational relief to hotels and restaurants across the country and help stabilise the hospitality industry during a period of escalating input costs.