Hotel accommodation bill
This query is : Resolved
09 July 2015
can we take cenvat credit on hire charges of accommodation in hotel
09 July 2015
Room booked in hotel for company , can we take cenvat credit on bill including 8.40% service tax
09 July 2015
Room booked in hotel for company , can we take cenvat credit on bill including 7.42% service tax
28 July 2024
The eligibility to claim CENVAT credit on hotel accommodation expenses can be a bit complex and depends on the specific nature of the expense and the purpose for which the accommodation is used. Here's a detailed look at whether CENVAT credit can be claimed on hotel accommodation charges, including service tax:
### **1. General Rule for CENVAT Credit**
**CENVAT Credit** is available on inputs, input services, and capital goods that are used in the course of business to produce taxable output. The key criteria for claiming CENVAT credit are:
- The input service should be used in the course of or in relation to the manufacture of goods or provision of taxable services.
- The service provider should have issued a proper invoice or any other document as prescribed.
### **2. Hotel Accommodation Charges**
**1. **Business Purpose Accommodation:**
- **Input Service Definition**: According to the CENVAT Credit Rules, services such as hotel accommodation can qualify as an input service if the accommodation is used in the course of business. For instance, if the accommodation is used for business meetings, official tours, or other business-related activities, it may qualify for CENVAT credit.
- **Documentation Required**: Ensure that the hotel invoice is in the name of the company, shows the amount of service tax charged, and includes details such as the hotel’s service tax registration number. The invoice should be used to support the claim for CENVAT credit.
**2. **Service Tax Rate:**
- **8.40% Service Tax**: Historically, the service tax rate of 8.40% was applicable, but this has been revised over time. As per the GST regime, this would fall under the old service tax rules if you are referring to a period before the GST implementation.
- **7.42% Service Tax**: Similarly, the rate of 7.42% would have been applicable before the introduction of GST.
### **3. Specific Situations**
**1. **Accommodation for Business Purposes:**
If the accommodation is used for official business purposes (e.g., travel for business meetings), you can generally claim CENVAT credit on the service tax component of the hotel bill. Ensure that the invoice is appropriately documented.
**2. **Accommodation for Personal Use:**
If the accommodation is for personal use, such as for the personal stay of employees or management, the CENVAT credit cannot be claimed.
### **4. Practical Steps for Claiming Credit**
**1. **Verify Eligibility**: Ensure that the accommodation is directly related to the business activity and the hotel invoice is compliant with the rules.
**2. **Maintain Documentation**: Keep all invoices, receipts, and supporting documents for claiming the credit.
**3. **File Returns**: Include the CENVAT credit claim in your periodic returns (such as ST-3 under the old service tax regime or GST returns if under GST).
**4. **Consultation**: For specific cases, especially where there might be ambiguity, consult with a tax professional or legal advisor to ensure compliance with the latest regulations.
### **5. GST Impact**
Under the GST regime, accommodation services are covered under GST rather than service tax. The GST rates and rules apply, so you should also be aware of the GST implications if the service is under the new tax regime.
### **Conclusion**
You can generally claim CENVAT credit on hotel accommodation expenses if they are for business purposes, subject to the compliance of documentation and the proper application of the rules. Ensure that you have the proper invoices and are adhering to the relevant rules applicable at the time.
For the latest updates and specific cases, always refer to the current tax laws or consult with a tax advisor.
### **1. General Rule for CENVAT Credit**
**CENVAT Credit** is available on inputs, input services, and capital goods that are used in the course of business to produce taxable output. The key criteria for claiming CENVAT credit are:
- The input service should be used in the course of or in relation to the manufacture of goods or provision of taxable services.
- The service provider should have issued a proper invoice or any other document as prescribed.
### **2. Hotel Accommodation Charges**
**1. **Business Purpose Accommodation:**
- **Input Service Definition**: According to the CENVAT Credit Rules, services such as hotel accommodation can qualify as an input service if the accommodation is used in the course of business. For instance, if the accommodation is used for business meetings, official tours, or other business-related activities, it may qualify for CENVAT credit.
- **Documentation Required**: Ensure that the hotel invoice is in the name of the company, shows the amount of service tax charged, and includes details such as the hotel’s service tax registration number. The invoice should be used to support the claim for CENVAT credit.
**2. **Service Tax Rate:**
- **8.40% Service Tax**: Historically, the service tax rate of 8.40% was applicable, but this has been revised over time. As per the GST regime, this would fall under the old service tax rules if you are referring to a period before the GST implementation.
- **7.42% Service Tax**: Similarly, the rate of 7.42% would have been applicable before the introduction of GST.
### **3. Specific Situations**
**1. **Accommodation for Business Purposes:**
If the accommodation is used for official business purposes (e.g., travel for business meetings), you can generally claim CENVAT credit on the service tax component of the hotel bill. Ensure that the invoice is appropriately documented.
**2. **Accommodation for Personal Use:**
If the accommodation is for personal use, such as for the personal stay of employees or management, the CENVAT credit cannot be claimed.
### **4. Practical Steps for Claiming Credit**
**1. **Verify Eligibility**: Ensure that the accommodation is directly related to the business activity and the hotel invoice is compliant with the rules.
**2. **Maintain Documentation**: Keep all invoices, receipts, and supporting documents for claiming the credit.
**3. **File Returns**: Include the CENVAT credit claim in your periodic returns (such as ST-3 under the old service tax regime or GST returns if under GST).
**4. **Consultation**: For specific cases, especially where there might be ambiguity, consult with a tax professional or legal advisor to ensure compliance with the latest regulations.
### **5. GST Impact**
Under the GST regime, accommodation services are covered under GST rather than service tax. The GST rates and rules apply, so you should also be aware of the GST implications if the service is under the new tax regime.
### **Conclusion**
You can generally claim CENVAT credit on hotel accommodation expenses if they are for business purposes, subject to the compliance of documentation and the proper application of the rules. Ensure that you have the proper invoices and are adhering to the relevant rules applicable at the time.
For the latest updates and specific cases, always refer to the current tax laws or consult with a tax advisor.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax Liability on Trading Account in Name of Person with Disability (Autism) Operated by Guardian
- Dinner party and 194Q
- TDS on Purchase of Goods 194Q
- GST RATE FOR CONSTRUCTION OF ROAD
- COMPLIANCE FOR HUF AFTER DEATH OF KARTA
- Inter company borrowing
- Adt1 dsc where to affix?
- Profit and sale of mutual fund by the trust
- Clarification Required on GST Rate & HSN Classification – Millet-Based Probiotic Drink
- Health insurance
- AMC Contract &GST &Income Tax
- TDS Return filing if only have 15G /15H deductions and no other payments
- IMPORT OF GOODS CREDIT
- 80G deduction eligibility
- GST on Tobacco - as per new notification
- Cant amend a 26QB
- Gst no of supplier cancelled from 2017
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- TDS under section 195.
Trending Online Classes
-
Online GST Course - Master the Fundamentals of GST with Practical Insights
Ruhi Joshirao19 January 2026
CAclubindia
