We all know that GST rates for restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging, is 5%. However, if you run a restaurant in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging the GST rates would either be 5% or 18% depending on facts and circumstances mentioned in the subsequent paras.
For better understanding, first let’s quickly go through the GST rates applicable for hotel rooms.
Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having value of supply i.e. realised amount.
|Realised amount per room/person per night||GST Rates|
|Less than Rs.1,000||0%|
|Rs.1,000 – Rs.2,499||12%|
|Rs.2,500 – Rs.7,499||18%|
|Rs.7,500 and above||28%|
(as mentioned under SAC 9963)
NOTE : GST on hotel rooms depends upon realised amount and not on declared tariff.
“Declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit.
Now that we are aware of the slab rates of hotel room, let’s discuss on the GST rates for Restaurants inside the hotel, which depends upon declared room tariff and not on realised amount.
If the Declared room tariff is:
Hotel restaurant’s GST tax rate also affects whether or not you can claim the Input Tax Credit. If you fall into the 18% bracket, you are allowed to use the Input tax credit for all of the goods you purchase to use in your restaurant. If your hotel restaurant falls into the 5% bracket, you cannot claim Input Tax Credit.
Check out the below illustration for better understanding.
Mr. X, books a room in a hotel for 1 nights. The declared tariff of the room is Rs.7,500. However, upon mutual consent Mr. X agreed to pay only Rs.7,000
1) What is the GST on Hotel room?
2) What is the GST on Restaurant bill inside the Hotel?
1) Since the GST on hotel room depends on the amount received i.e. Rs.7,000, this falls under 18% slab rate. Hence total amount payable including GST by Mr. X is Rs.8260 ( 7000 + 1260 ).
2) GST on restaurant bill inside the hotel depends on the declared tariff. Even though the amount agreed by Mr. X is Rs.7,000, the declared tariff of the room per night is Rs.7,500 and accordingly the restaurant bill attracts 18% GST.