Sachin Kumar Mishra

GST TAX RELIEF FOR HOTELS – Upcoming GST on the Hotel Industry

The GST Council has agreed to lower tax rates imposed on the hotel industry during its meeting on Friday. Led by Finance Minister Nirmala Sitharaman, the all-powerful council decided to tax hotels on rates varying from 18 to zero per cent, depending on their tariffs. With this, the hotel industry has been removed from the 28 per cent tax slab, the highest under the GST regime.

The GST Council has decided to tax hotels with room tariff of Rs 7,500 and above at 18 per cent instead of the earlier 28 per cent. Hotels with tariffs in the range of Rs 1,000 to Rs 7,500 will have to pay GST at a rate of 12 per cent. Lastly, hotels with tariffs below Rs 1,000 have been exempted from paying taxes under the GST regime, according to Press Release by GST Council.

The GST Council has also agreed to lower tax rates on outdoor catering to 5 per cent, with the option to avail input tax credit.

Additionally, the GST Council has reportedly decided to increase the tax rate for caffeinated drinks to 28 per cent from 18 per cent. An additional 12 per cent cess would also be imposed on such beverages.

                                   GST TAX RELIEF FOR HOTELS

Room Tariff Earlier New
Up To 1000 Nil Nil
INR 1000-2500 12% 12%
INR2500-7500 18% 12%
Above INR 7500 28% 18%

​Hotel Tariffs below Rs. 1,000 GST at Nil rates.

Example:

Room Charge           1000

CGST                               00

SGST                               00

​Hotel Tariffs Rs. 1,000 upto 7,500 GST at 12%.

Example:

Room Charge           1100

CGST   6%                      66

SGST   6%                      66

Rooms Charge          1232

Hotel Tariffs above 7500 Rs. GST at 18%.

Room Charge           7500

CGST   09%                675

SGST   09%                 675

Rooms Charge          8850

Extract of Press Release relevant to Hotel Industry-

Hospitality and tourism:

1. To reduce the rate of GST on hotel accommodation service as below: –

Transaction Value per Unit (Rs) per day GST
Rs 1000 and less Nil
Rs 1001 to Rs 7500 12%
Rs 7501 and more 18%

2. To reduce rate of GST on outdoor catering services other than in premises having daily tariff of unit of accommodation of Rs 7501 from present 18% with ITC to 5% without ITC.  The rate shall be mandatory for all kinds of catering. Catering in premises with daily tariff of unit of accommodation is Rs 7501 and above shall remain at 18% with ITC.

Also Read Press Releases by Ministry of Finance on decisions taken in 37th GST Council Meeting

Changes in GST Rate on Goods | 37th GST Council Meeting

Changes in GST Rate on Services | 37th GST Council Meeting

Changes in GST Law and Return Filing including Annual Returns

(Author can be reached at sachincpr@gmail.com)

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