GST on Hotel industry

[CA.VINOD CHAURASIA]

Introduction: This article discusses in detail about the GST taxability of services of provided by hotel  industry.

Types of services provided by Hotel Industry:

1. Room accommodation services.
2. Serving of foods and liquor in restaurant and in room.
3. Rent a cab.
4. Mandap keeper.
5. Banking and financial services like foreign currency exchange.
6. Supply of packed food items as mini bar.
7. Renting out the premises for events, conferences etc.
8. Catering.
9. Laundry services.
10. Business support services.
11. Telecommunication services like telephone, fax, wifi.
12. Beauty parlour
13. Gymnasium services.
14. Club Facility

Applicable GST Tax Rates

Renting of hotels, inns, guest houses, clubs, campsites or other commercial places
Sl. No.	Room Tariff Per Day	Rate of Tax
1	Less  INR 1,000	0%
2	Between INR 1000 but less than 2500	12% With Full ITC
3	Between INR 2500 but less than 7500	18% With Full ITC
4	INR 7500 or above	28% With Full ITC

 

Supply of Food/drinks in restaurant
Sl. No.	Criteria	Rate of Tax
1	Supply of Food/drinks in restaurant not having facility of air-conditioning or central heating at any time during the year and not having licence to serve liquor.	12% With Full ITC
2	Supply of Food/drinks in restaurant having facility of air-conditioning or central heating at any time during the year	18% With Full ITC
3	Supply of Food/drinks in restaurant having licence to serve liquor	18% With Full ITC
4	Supply of Food/drinks in outdoor catering	18% With Full ITC
5	Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises	18% With Full ITC
6	Supply of Food/drinks in air-conditioned restaurant in 5-star or above rated Hotel	18% With Full ITC
7	Services by way of admission to entertainment events or access to amusement facilities including exhibition of cinematograph films, theme parks, water parks, joy rides, merry-go rounds, go-carting, casinos, race-course, ballet, any sporting event such as IPL and the like;	28% With Full ITC
Point to be Noted: Serving of Alcoholic drinks will be outside the preview of GST and local sales tax or VAT shall be applied on the same. It is advisable for the hotel to issue the separate bills for alcoholic drinks and foods.

 

RENT A CAB
1	Rent a cab (If fuel cost is borne by the service provider)	5% with No ITC.
		ITC shall be available if cab is booked from other cab operator.
2	Rent a cab (If fuel cost is borne by the service recipient)	18% with ITC Credit.

 

MANDAP KEEPER
1	Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises	18% With Full ITC

 

FORIEGN CURRENCY EXCHANGE SERVICES
1	In case of currency exchange to its guest	18% with ITC Credit, but valuation shall be done as per valuation rules
Valuation of currency Rules
1	Between INR 0 to 1 Lakh	1% or ₹ 250/-, Whichever is higher
2	More than INR 1 Lakh to 10 Lakhs	₹ 1,000 + 0.50%
3	More than INR 10 Lakhs	₹ 5,000 + 0.10%  or  ₹ 60,000/-, Whichever is lower

 

 

SUPPLY OF PACKED FOOD IN MINI BAR
1	Supply of packed food in mini bar	Rate shall be as per product rate.

 

 

Other Services
1	Renting out the premises for events, conferences	18% with full ITC Credit.
2	Laundry services	18% with full ITC Credit.
3	Business support services	18% with full ITC Credit.
4	Telecommunication services like telephone, fax, Wi-Fi.	18% with full ITC Credit.
5	Beauty parlour	18% with full ITC Credit.
6	Gymnasium services	18% with full ITC Credit.
7	Club Facility.	18% with full ITC Credit.

How to determine place of supply in case of hotel industry:

Nature of Services	Place of Supply
Accommodation by a hotel, inn, guest house, home stay club or campsite	Location of immovable property
Accommodation by a hotel for organising marriage or  reception or matters related thereto official, social, cultural, religious, or business function	Location of immovable property
Any services ancillary to the above	Location of immovable property
Restaurants or  catering services, personal groomig, fitness, beauty treatment, health services	Location where services are actually performed

 Time of Supply:

In case of Food, time of supply would be immediately after the delivery happens

In case of service, time limit of 30 days available for raising the invoice.

For advance booking, the time of supply is due immediately on receipt of money.

Input Tax Credit

 Input tax credit is available:

• in case of all purchases of materials for day to day operations of the Hotel.
• in case of purchase of capital goods like furniture & fixtures etc,  cutlery, bed linen, utensils etc.
• Plant & Machinery

Input tax credit is not available:

• For purchase of Liquor, input tax credit not available.
• New investment in building (immovable property) self constructions.

The author is a practising CA based in Delhi and is registered Insolvency Professional. He can be reached at cavinodchaurasia@gmail.com , Mob. +91 9953587496.