GST Impact on Hospitality Industry

GST RATE ON HOTELS, RESTAURANTS & HOSPITALITY SERVICES

The consolidated provisions under GST related to Hotels, Restaurants and Hospitality Sector:-

PART I – RATE OF GST ON HOTEL ROOMS

Note – GST is charged based on the Declared Room Tariff which is explained as below:-

“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.”

I) RATE OF GST – Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes:-

1. Declared Room Tariff upto Rs. 999/- : GST @ NIL  [Remark – No ITC Credit]

2. Declared Room Tariff from Rs. 1000/- upto Rs. 2499/- : GST @ 12% [ITC Credit allowed]

3. Declared Room Tariff from Rs. 2500/- upto Rs. 7499/- : GST @ 18% [ITC Credit allowed]

4. Declared Room Tariff from Rs. 7500/- and above : GST @ 28% [ITC Credit allowed]

[NOTE : GST Rate is decided on the basis of Declared Room Tariff but the tax is chargeable only on the actual amount charged from the customer/ guest]

PART II – RATE OF GST ON FOOD & BEVERAGES (F&B) SALE

1. All stand-alone restaurants irrespective of air conditioned or otherwise, will attract 5% without ITC. Food parcels (or takeaways) will also attract 5% GST without ITC.

2. Restaurants in hotel premises having room tariff of less than Rs 7500 per unit per day will attract GST of 5% without ITC.

3. Restaurants in hotel premises having room tariff of Rs 7500 and above per unit per day (even for a single room) will attract GST of 18% with full ITC.

PART III – RATE OF GST ON MINOR OPERATING DEPARTMENT (MOD) SALE

1. Outdoor Catering – 18% [ITC Credit Allowed]

2. Banquet Service – 18% [ITC Credit Allowed]

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

3. Laundry Service – 18% [ITC Credit Allowed]

4. SPA – 18% [ITC Credit Allowed]

5. Telephone, Internet, Safari,  & Other Experiences – 18% [ITC Credit Allowed]

6. Renting of Motor Cab – 5% [No ITC Credit Allowed]

7. Supply of Tour Operator Service – 5% [No ITC Credit Allowed]

PART IV : PLACE OF SUPPLY – FOR IDENTIFYING APPLICABILITY OF IGST Vs. CGST/SGST

I) FOR HOTELS:-

1. When Supplier, Recipient and Hotel Property is located in India – It shall be the place where the Hotel is Located [Section 12 of IGST Act]

2. When the Supplier, Recipient are located in India BUT Hotel Property is located outside India – It shall be the place of the Recipient [Proviso to Section 12 of IGST Act]

3. When the Supplier or Recepient are located outside India – It shall be the place where the Hotel is Located [Section 13 (4) of IGST Act]

II) FOR RESTAURANTS

The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery shall be the location where the services are actually performed. [Section 12 (4) of IGST Act]