FHRAI Raises Concerns Over Agoda's Practices and GST Compliance
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Synopsis
The FHRAI has voiced serious concerns regarding Agoda's unilateral changes to commission structures and alleged GST non-compliance, affecting the Indian hospitality sector's recovery post-pandemic.
Key Takeaways
- FHRAI expresses concerns over Agoda's practices.
- Agoda's commission structure violates Indian tax laws.
- GST compliance issues could impact hotels financially.
- Complaints from hotels regarding Agoda’s operational practices.
- FHRAI calls for fair collaboration and transparency.
New Delhi, April 19 (NationPress) The Federation of Hotel and Restaurant Associations of India (FHRAI) has raised significant issues regarding the unilateral modifications implemented by the global online travel agency Agoda concerning its commission framework and terms of cooperation with Indian hospitality partners.
The FHRAI, which represents over 60,000 hotels and 500,000 restaurants throughout the nation, also accused Agoda of not adhering to GST regulations. The organization stated that Agoda is imposing a commission on the GST amount, which is in direct violation of Indian tax laws.
Moreover, Agoda is not applying GST to its commission, effectively shifting the tax burden onto Indian hotels, thus raising concerns about the ensuing difficulties in GST reconciliation and potential loss of government revenue, particularly impacting tax-compliant and publicly listed hospitality firms.
“The hospitality sector in India is striving to recover and rebuild following the pandemic. In this context, unilateral actions by platforms such as Agoda undermine fair collaboration and breach both legal and contractual obligations,” remarked K Syama Raju, President of FHRAI.
FHRAI has urged Agoda to promptly revert the recent alterations to its commission framework, return to the former tax-excluded model in line with existing contracts, and adhere to Indian tax regulations.
In an official correspondence addressed to Agoda’s leadership, FHRAI emphasized the introduction of the “Reference Sell Rate” (RSR), a new commission calculation model that charges a commission on the total room rate, including taxes, despite the signed agreements stipulating that commissions should only be calculated on the room rate exclusive of taxes. This act directly contravenes the terms of established contracts between Agoda and hotel partners.
The association highlighted that Agoda’s decision to charge commission on the gross rate inclusive of GST, rather than the base rate, has imposed financial stress and operational challenges on its member establishments.
The FHRAI has also received numerous complaints from member hotels regarding Agoda’s operational methods.
These grievances include the application of discounts and promotional offers without prior consent, payment delays with an option for expedited transfer only at an additional commission, insufficient communication from Agoda’s account managers, and alterations to rate plans without approval—occasionally even redirecting bookings to other online travel agencies (OTAs).
“We strongly encourage Agoda to uphold fair business practices and ensure complete transparency in their dealings with Indian hotel partners,” stated Raju.
