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GST on Hotels – A Complete Guide

Services provided by the hotel is a taxable service in GST. 

The place of supply will always be the state/union territory where the hotel is located even if the guest is a registered person and has GSTIN of another state. Therefore, a hotel has to charge SGST and CGST always.

The guest can take input tax credit of SGST and CGST paid if the hotel is in the same state as of the guest.

For example – A registered person in Jaipur go for a business trip to Jodhpur. The hotel in Jodhpur charged SGST and CGST and issued a bill with the guest GSTIN. In such a case the registered person can take input tax credit of GST paid. 

Now the same businessmen go to Delhi for a business trip. The hotel in Delhi charged SGST (Delhi) and CGST and issued a bill with guest GSTIN. Since the businessman is not registered in Delhi, he will not be able to take input tax credit of such GST paid. 

GST Rate

Tariff Per NightGST Rate
Less than Rs. 1,000No GST
Rs. 1,000 to Rs. 7,49912%
Rs. 7,500 or more28%

Till 26-07-2018, the GST rates were based on the declared tariff of the hotels. W.e.f 27-07-2018, the GST rate will be based on the value of supply. It means that from 27-07-2018 the GST rate will be applied on the actual charges taken from guest per night and not on the basis of declare tariff. The GST rate will also be decided on basis of actual charges also.

The GST rate is not based on the Star rating of a hotel. It solely depends on the price charged.

Service Accounting Code (SAC) is 9963.

GST on cancellation charges – Hotels generally takes a booking amount at the time of booking of rooms. And it may or may not be 100% refundable as per conditions agreed upon. If the guest cancels the booking, the hotel charges a cancellation fee and refund the rest amount, if any. 

Now the question is what will be the GST rate on such cancellation fee?  In such case, the cancellation fees will fall under SAC 99979 and the GST rate will be 18% irrespective of the GST rate applicable on the hotel booking.

Registration Requirement

A hotelier is required to get registered if the turnover exceeds the turnover limit or Rs. 20/10 lakhs. If a hotel is registered on e-commerce operators like Goibibo or MakeMyTrip and turnover is less then specified limit then also he is NOT required to get registered.

Taking booking from online portals

It has become very common for hotels to get their clients from online portals like Goibibo and MakeMyTrip. 

If the turnover of hotelier is less than 20/10 lakhs and is also not registered voluntarily, then the e-commerce operator (Goibibo) is required to collect GST on transactions made through it. 

If the hotelier is registered, then the hotelier himself is required to charge GST directly from clients. The e-commerce operator is liable to deduct TCS at the rate of 1% from the payment made to the hotelier.

 Input Tax Credit

The hotel can take input tax credit of all goods and services used for providing service. Although, if a hotel has its restaurant and charging 5% on it then ITC on such separate service is not allowed.

FAQ

1) A hotel got himself registered on fab hotels. Fab hotels give their listing on Goibibo. In this case, Gobibo doesn’t have any information of the hotel. In this case who is liable to collect TCS.

Ans – As per Sr no. 28 of FAQ on TCS issued by GST committee, in such a case the e-commerce operator who is making payment to the hotel is liable for collection of TCS. Therefore, Fab hotel is liable to collect TCS in such case. 

2) A hotel provides free laundry services of 2 clothes as a complimentary service. How to apply GST on such laundry service?

Ans – Providing laundry service is ancillary to the main service of providing accommodation service. Therefore, there is no need to charge separate GST on such service.

Prateek Agarwal

Prateek Agarwal

I am Practicing Chartered Accountant from Jaipur and in practice for more than 9 years. I writes mainly for GST and Finance.

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