Sunil Kumar

Sunil Kumar

The Hotel aggregators such as OYO Rooms, Make my trip etc. who arranges stay for us are cruelty come under the ambit of service tax. These aggregators are liable to pay service tax on the entire accommodation. The service tax law defines the aggregator as a person who owns and manages an application and enables potential customers to avail the service of a particular service provider under the brand name of an aggregator. The Notification no 01/2017-ST has made a laudable amendment into this service. This article focuses on amendment background, need and its impact.

Initially, Concept was to cover Cab Aggregators

The concept of aggregator originally was brought to cover the transactions of cab aggregators, wherein the service provider i.e. Individual drivers, provides service and aggregators such as Ola, Uber plays a role of mediator.

The concern of the government was that, since, the service provider i.e. Individual Car Owners, provides service lesser than what requires to come under the ambit of service tax and pay the same. Therefore, there was a substantial loss of revenue to the Government on this part. The Government had made the amendment to levy service tax on aggregators instead of such Individual Car Owners.

However, the definition of aggregator was defined in such a way that it covers other aggregators also. The definition also covers the hotel aggregators but in practice if we see hotels are generally registered under service tax and also discharging their service tax liability. So’ there is a hurdle at the end of the hotel aggregator.

Need for amendment

There was a genuine hardship to the hotel aggregators as the current service tax regime requires them to discharge the service tax on entire accommodation value which customer pays. Further, Hotels are also liable to pay service Tax. The FICCI in its pre-budget 2017 has also urged the Finance Ministry to provide proper valuation mechanism on service of aggregator.

Amendment in brief

The new provision says that the hotel aggregator would not be treated as hotel aggregators under the law, if, two conditions pertaining to the same is satisfied:

a) Such Hotel is registered under the service tax

b) Entire Consideration is received by such hotel

Both the above condition sounds logical but requires sincere consideration on the part of the hotel aggregators. If we see currently, in general, the hotel aggregator first receives the entire consideration and after deduction of their commission portion pays the remaining portion to the hotel. This business model would not be workable if they want to avail this benefit. The aggregators need to relook to their business model. Further, they need to maintain keep in track of hotels which are registered under the service tax, because, if they are not registered then hotel aggregator would be liable to discharge the service tax.


Overall it is a positive amendment but at the same time it requires relooking on to the entire business model of the hotel aggregators. Further, the amendment would also impact the cash liquidity of such aggregators as now the entire consideration for accommodation first goes to hotel and hotel will pay the commission to the aggregators.

About Author: The Author is Chartered Accountant by profession and can be reached at

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2 responses to “Service Tax amendments on Hotel Aggregators”


    Your article is nice, but it should much more elaborated.

  2. CA. Tejas Andharia says:

    Nice Article.

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