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Published on:

May 6, 2024

Viraaj Vashishth

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Check GST Rate on Hotel Rooms, Bills and Accommodation

Check GST rate on hotel rooms, billing and accommodation

Various sectors in India have been affected by the introduction of the Goods and Services Tax (GST), with the hotel and tourism industry being among them. One of its most significant effects has been the imposition of 12% and 18% GST on hotel accommodations. This is important because it will determine if correct tax provisions have been made as well as whether the company is optimizing its tax expense or not. Hoteliers should be familiar with these criteria. The article discusses: how to determine GST rates for charging supplies at an inn; eligibility to claim ITC; newest GST rule amendments concerning hotel accommodation.

GST in the Hotel Industry

The impact of the Goods and Services Tax (GST) on pricing and billing makes it a major issue for hotels. This section looks at how GST affects charges relating to hotel bills, including details about rates for different types of services offered in hotels.

GST On Hotel Bill

The fees for lodging are subject to the Goods and Services Tax (GST). The GST applied varies according to the tariff per night, and the type of services provided. This is in line with its aim of streamlining tax implementation as well as making hotel billing transparent.

Hotel Bill GST Rate

Different slabs categorize GST rates that apply to various room tariffs/per every night. Here is a detailed summary of the applicable GST rates for the hotels:

Room Tariff per Night	GST Rate
Up to Rs.1,000	Nil
Rs.1,001 to Rs.7,500	12%
Above Rs.7,500	18%

1. Nil rate – Hotels having rupees 1000 or less per day as room tariff are exempted from payment of any GST.

2.12%: levied if your hotel has room charges falling between Rs. 1001 and Rs.7500 per day

3. 18%: charged at all hotels where room tariffs surpass Rs.7500 each night

What is the GST Levied on Hotel Accommodation?

A “declared tariff” is that rent for a room is fixed by the hotel authority and in this regard it should be reported to the government as per their guidelines and on which GST is calculated. Therefore, in such a situation if you get reservations at highly discounted rates through your travel agent or online booking agencies you will be charged taxes on a published tariff but actually because of industry discount contracts or corporate tie-ups, the actual price may be too low which would hardly have any taxes involved, hence leading to variances when billing for such rooms traditionally.

For instance, let’s say you booked a hotel that costs INR 7520 at a reduced rate of INR 5000. It will still attract a GST based on the declared tariff amounting to INR 6353 (5000 + 1353.6 GST).

New GST Rate on Hotel Rooms Rent

One should note that there are different new GST rates for each slab of tariff. While rooms with a tariff of less than INR 1,000 are exempt from GST, those between INR 1,001 and INR 7,500 have a 12% GST rate whereas hotel accommodations above INR 7,501 are charged with an 18% GST rate. Here are the pre and post GST era comparisons of the charges that one may occur with while renting a hotel room:

Service	Pre-GST Taxes	Post-GST Rates	Benefits of GST
Room Tariff	- Luxury Tax: 5% -15% (varies by state) -Service Tax: 9%	-12% for tariffs up to Rs.1,000 -18% for tariffs above Rs.1,000	- Simplified tax structure -Elimination of multiple taxes
Food and Beverages	- VAT: 12% -20% (varies by state) -Service Tax: 6%	- 5% without ITC (In-Room Dining) -18% with ITC (Restaurant Services)	- Consistent rates across states -Input tax credit availability
Other Services	- Service Tax: 15% -VAT on specific items	-18%	- Reduction in overall tax burden -Increased transparency and compliance

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Input Tax Credit (ITC) on Hotel Accommodation

The ITC on hotel accommodation is a huge advantage of GST, which facilitates the refund to businesses for the goods and services bought in the course of furtherance of their business. The person should have a GST number to claim ITC on hotel accommodation, share all details with the hotel and claim ITCs on the whole tax amount. As a result, the company saves on amounts payable as tax.

Moreover, it must be understood that only when hotel accommodation is used for business reasons can I.T.C be claimed. If for instance this is used for personal holidays or family matters then it will not be refunded tomorrow however if it is utilized for business then the total will be fully I.T.C., refundable one more day. They also must tell their hotels about the correct numbers regarding their I.T.C. hence leading to the right G.S.T. 's invoice numbers required by them so that they can pass this information over.

GST Implications of Hotel Accommodation Cancellation Fees

These hotels levy an 18% GST on any passenger who cancels their ticket, irrespective of the GST at the time of booking. Being a tax that is uniformly charged for cancellations by hotels, it is meant to make it simpler for businesses to determine hotel costs and expenses.

The businesses with knowledge of the declared tariff, ITC claim process and GST rates are those that are likely to optimize their expenditure in connection with hotel accommodation expenses.

Conclusion

Both consumers and business people in the hospitality industry need to know how much tax they are supposed to pay on accommodations and rooms in hotels. By keeping themselves updated on relevant GST rates such as nil per cent for budget places down to 18% for premium stays, one can properly handle their finances while acting in compliance with taxation requirements.

For customers, knowing these rates can be useful when budgeting or calculating the overall cost of stay whereas merchants can use them accordingly to apply the correct amount of GST, manage pricing approaches as well as improve input duty credit (ITC). As a result, regular updating on GST regulations will enhance clarity during billing and help in the smooth running of the hotel industry. These aspects of GTS would help you through taxing exclamations if you are planning your stay or running a hotel.

FAQs

1. How much is GST on hotel rooms?

GST on hotel rooms refers to the amount of goods and services tax charged for any stay in a hotel depending on room rentals.

2. What is the current hotel GST rate?

Current rates of hotel GST are determined by room tariffs which are usually at 0%, 12% or 18%.

3. How does GST on hotel bills work?

GST on hotel bills is a sum of money that is added to the cost of accommodation per night and it is calculated based on the room tariff.

4. What is the GST rate on hotel rooms for rooms priced above Rs.7,500?

Rooms that are priced more than Rs.7,500 per night have been subjected to an 18% in terms of GST rate.

5. Are there new GST rates on hotel room rent?

Absolutely yes, with effect from now, many hotels will be taxed at zero per cent for those whose prices do not exceed one thousand rupees, twelve per cent for those who fall between one thousand and seven thousand five hundred rupees while those above seventy-five hundred rupees will be levied eighteen per cent under this new system.

6. How is GST on hotel accommodation applied?

Concerning the way hotels charge their customers, they apply for overnight night stays and the classification of hotels determines its level in India.

7. What is the GST rate on hotel rooms less than Rs.1,000?

The GST rate on hotel rooms less than Rs.1,000 is zero.

8. How will GST affect the hospitality sector?

By incorporating a tax element into hotel room costs depending on the tariff structure, pricing will be influenced by GST.

9. Can I claim ITC on hotel accommodation?

ITC for hotel accommodation may be claimed by businesses if it conforms to the criteria of GST and when used for business purposes.

10. What is the GST rate in hotel bills for rooms ranging between 1001 Rs and 7500 Rs?

12% would be charged as GST in a hotel bill for rooms with prices ranging from INR 1001 to INR 7500.

11. How does the GST rate of hotels affect tourists?

It affects the overall expenses of lodging such that higher rates are associated with costlier rooms.

12. What is covered under GST on hotel stays?

GST on Hotel Stay includes a levy imposed upon the amount paid towards staying in a Hotel which could vary due to room tariffs or services provided by hotels etc.

13. What are the GST slabs for hotel room tariffs?

Slabs under the Goods and Service Tax (GST) regime applicable to room tariffs of hotels consist of 12% up to Rs 1000 per night, and above this slab, it becomes 18%.

14. Can businesses claim GST on hotel expenses for their employees?

Yes, companies can claim GST on employees’ hotel expenses only when the expenditure is connected with business travel and the hotel bill is in the name of the company.

15. Is the new GST rate on hotel room rent applicable to all hotels?

The new GST rates cover all hotels, but their magnitude depends on that particular room rent structure. The 18% slab accommodates hotels with tariffs above Rs.1,000 per night while those falling below this amount belong under the 12% slab.