Introduction: This article discusses in detail about the GST taxability of services of provided by hotel industry.
Types of services provided by Hotel Industry:
- Room accommodation services.
- Serving of foods and liquor in restaurant and in room.
- Rent a cab.
- Mandap keeper.
- Banking and financial services like foreign currency exchange.
- Supply of packed food items as mini bar.
- Renting out the premises for events, conferences etc.
- Catering.
- Laundry services.
- Business support services.
- Telecommunication services like telephone, fax, Wi-Fi.
- Beauty parlour
- Gymnasium services.
- Club Facility
Applicable GST Tax Rates
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Renting of hotels, inns, guest houses, clubs, campsites or other commercial places |
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Sl. No. |
Room Tariff Per Day |
Rate of Tax |
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1 |
Less INR 1,000 |
0% |
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2 |
Between INR 1000 but less than 2500 |
12% With Full ITC |
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3 |
Between INR 2500 but less than 7500 |
18% With Full ITC |
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4 |
INR 7500 or above |
28% With Full ITC |
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Supply of Food/drinks in restaurant |
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Sl. No. |
Criteria |
Rate of Tax |
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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 license to serve liquor. |
12% With Full ITC |
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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 |
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3 |
Supply of Food/drinks in restaurant having license to serve liquor |
18% With Full ITC |
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4 |
Supply of Food/drinks in outdoor catering |
18% With Full ITC |
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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 |
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6 |
Supply of Food/drinks in air-conditioned restaurant in 5-star or above rated Hotel |
18% With Full ITC |
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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 |
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Point to be Noted:
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RENT A CAB |
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1 |
Rent a cab (If fuel cost is borne by the service provider) |
5% with No ITC. |
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ITC shall be available if cab is booked from other cab operator. |
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2 |
Rent a cab (If fuel cost is borne by the service recipient) |
18% with ITC Credit. |
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MANDAP KEEPER |
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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 |
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FORIEGN CURRENCY EXCHANGE SERVICES |
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1 |
In case of currency exchange to its guest |
18% with ITC Credit, but valuation shall be done as per valuation rules |
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Valuation of currency Rules |
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1 |
Between INR 0 to 1 Lakh |
1% or Rs. 250/-, Whichever is higher |
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2 |
More than INR 1 Lakh to 10 Lakhs |
Rs. 1,000 + 0.50% |
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3 |
More than INR 10 Lakhs |
Rs. 5,000 + 0.10% or Rs. 60,000/-, Whichever is lower |
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SUPPLY OF PACKED FOOD IN MINI BAR |
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1 |
Supply of packed food in mini bar |
Rate shall be as per product rate. |
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Other Services |
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1 |
Renting out the premises for events, conferences |
18% with full ITC Credit. |
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2 |
Laundry services |
18% with full ITC Credit. |
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3 |
Business support services |
18% with full ITC Credit. |
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4 |
Telecommunication services like telephone, fax, Wi-Fi. |
18% with full ITC Credit. |
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5 |
Beauty parlour |
18% with full ITC Credit. |
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6 |
Gymnasium services |
18% with full ITC Credit. |
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7 |
Club Facility. |
18% with full ITC Credit. |
How to determine place of supply in case of hotel industry:
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Nature of Services |
Place of Supply |
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Accommodation by a hotel, inn, guest house, home stay club or campsite |
Location of immovable property |
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Accommodation by a hotel for organizing marriage or reception or matters related thereto official, social, cultural, religious, or business function |
Location of immovable property |
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Any services ancillary to the above |
Location of immovable property |
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Restaurants or catering services, personal grooming, 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 practicing CA based in Delhi and is registered Insolvency Professional. He can also be reached at cavinodchaurasia@gmail.com
Disclaimer: The views expressed in this article are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.
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