GST ON HOTEL INDUSTRY

Hotel accommodation and travel industry is booming rapidly nowadays. So, it is very important to understand GST implications on these services. In this article we are going to discuss GST in case of services provided by hotels-

Services by hotels-

Services by a hotel, inn, guest house, club or campsite by whatever name called, for residential or lodging purposes, were exempt earlier where the value of supply of a unit of accommodation was up to rupees 1000 per day. But now following tariff is applicable.

Different types of services provided by hotel-

Hotels provide different types of services to their customers like residential, restaurant services, booking services etc. So, tax implication is determined by various factors whether the services are composite and mixed supplies. Below are some major services by hotel-

• Food and beverages-Where the room rent is up to 7500 rupees then outdoor catering services will be taxable @5% without ITC and if the room rent is above 7500 then it is chargeable @18%.
• Liquor-If a hotel does not have liquor license, then the rate of GST is 5% but if food and drinks are provided with liquor license then rate is 18%.
• E commerce –Online platforms like swiggy and Zomato are an integral part of the hotel industry. They took orders and charge their commission for services. GST will be applicable @18% of the commission paid to these platforms.

Registration requirement-

It is to be noted that GST shall not be levied for providing accommodation services when the hotel is not required to register as its aggregate turnover does not cross the limit of 20 lakhs.

Hotel booking through online portal-

Online booking is one of the most common features for the public. When hotels are booked through online portals like goibibo and MakeMyTrip then following two scenarios may take place-

1. When a hotel is not registered- When turnover of hotel is less than threshold limit of 20/10 lakhs and it is not voluntary registered, then e commerce operator (like goibibo or MakeMyTrip) is required to collect GST.
2. When hotel is registered- When hotel is registered in that case hotelier will charge GST from customer and E commerce operator will deduct tax @1% from payment made to hotel.

Time of supply-

Time of supply in case of hotel will be determined as follows-

Time of issue of invoice or provision of service whichever is earlier or at the time of recording in books but if invoice is not generated then time of receipt of payment or provision of service whichever is earlier or at the time of recording in books.

Place of Supply-

Place of supply will be the place where the hotel is situated. For example, if a hotel is situated in Maharashtra and the person who is receiving service at the hotel is registered in Delhi, in that case the place of supply will be Maharashtra.

Hotel services to SEZ units-

When a hotel provides service to special economic zone developer or special economic zone unit then it will be considered as interstate supply always and shall be charged with IGST.

Conclusion-

Guest is GOD (Atithi devo bhava) is one of the most central tenets of our Indian culture. So, GST law is also going through various amendments for growth of hospitality sector. We are hoping for some more favorable changes from our government very soon.

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