Service tax applicability (kc)
This query is : Resolved
19 May 2009
We are in the business of tour operator, mainly providing service of accomodation. but the thing is accomodation which we are providing to client for stay is taken on lease for various period by us and we have licence of luxury tax and bread and butter of same. we are providing cook along with accomodation facility. then how much service charges we have to collect, which tax is applicable and at what rate, how to raise invoice ?
20 May 2009
No service tax is applicable for provding accomodation services.
In your books the tour operator service and accomodation services should be separated as they are different streams of income.
In your books the tour operator service and accomodation services should be separated as they are different streams of income.
20 May 2009
why and under what circumstances same is not covered service tax ? is it not covered under booking of accomodation and charge abated rate of 10% ?
22 May 2009
We are in the business of tour operator, mainly providing service of accomodation. but the thing is accomodation which we are providing to client for stay is taken on lease for various period by us and we have licence of luxury tax and bread and butter of same. we are providing cook along with accomodation facility. then how much service charges we have to collect, which tax is applicable and at what rate, how to raise invoice ? is it covered under booking of accomodation and charge abated rate of 10% ?
24 July 2025
Got it — you’re asking about service tax applicability on accommodation services provided by a tour operator who leases the accommodation and also provides cooking services along with it.
Here’s a clear explanation:
1. Is service tax applicable on accommodation services?
Yes, service tax is applicable on accommodation services under the category “Hotel Accommodation Services”.
It applies when the tariff for a room is above Rs. 1,000 per day (or per unit of accommodation).
The service tax rate is generally 15% (including Swachh Bharat Cess and Krishi Kalyan Cess) on the tariff charged.
2. What if you are leasing the accommodation and providing it on rent?
If you lease the accommodation (say hotel rooms or flats) and provide it to clients, then your supply of accommodation is considered a taxable service.
The service tax liability is on the amount you charge your clients, not on your lease rental cost.
You can claim abatement (a deduction) of 60% on the value of the accommodation service under the “Hotel Accommodation Services” category, meaning service tax is payable on only 40% of the gross amount charged.
3. What about cooking services provided along with accommodation?
Cooking services are generally part of the composite supply of accommodation.
If you charge a lump sum amount including accommodation and cooking, you can consider the whole under “Hotel Accommodation Services” and apply the abatement.
If you charge separately for cooking (like catering), that portion may be liable to service tax under “Catering Service” at 15% without abatement.
4. How to raise invoice and calculate service tax?
Raise invoice showing total amount charged to client (accommodation + cooking).
Show service tax separately on the invoice.
Calculate service tax as follows:
Description Amount Notes
Gross Amount Charged Rs X Accommodation + cooking fees
Less: Abatement on accommodation 60% of accommodation value Apply only if lump sum
Taxable Value 40% of accommodation + full cooking charge Amount on which service tax is charged
Service Tax @ 15% 15% of taxable value Service tax applicable
5. Summary of your case
Since you lease accommodation and provide it with cooking, your service tax should be on 40% of accommodation value + full cooking charges.
Collect service tax at 15% on this taxable value.
Separate accounting for accommodation and cooking is advisable for clarity.
Invoice should clearly show:
Total amount charged
Break-up of accommodation and cooking (if separate)
Service tax charged separately
Important points:
You need to register for service tax if your taxable turnover crosses threshold limit.
You can avail Cenvat credit on input services used for providing accommodation and cooking service.
Here’s a clear explanation:
1. Is service tax applicable on accommodation services?
Yes, service tax is applicable on accommodation services under the category “Hotel Accommodation Services”.
It applies when the tariff for a room is above Rs. 1,000 per day (or per unit of accommodation).
The service tax rate is generally 15% (including Swachh Bharat Cess and Krishi Kalyan Cess) on the tariff charged.
2. What if you are leasing the accommodation and providing it on rent?
If you lease the accommodation (say hotel rooms or flats) and provide it to clients, then your supply of accommodation is considered a taxable service.
The service tax liability is on the amount you charge your clients, not on your lease rental cost.
You can claim abatement (a deduction) of 60% on the value of the accommodation service under the “Hotel Accommodation Services” category, meaning service tax is payable on only 40% of the gross amount charged.
3. What about cooking services provided along with accommodation?
Cooking services are generally part of the composite supply of accommodation.
If you charge a lump sum amount including accommodation and cooking, you can consider the whole under “Hotel Accommodation Services” and apply the abatement.
If you charge separately for cooking (like catering), that portion may be liable to service tax under “Catering Service” at 15% without abatement.
4. How to raise invoice and calculate service tax?
Raise invoice showing total amount charged to client (accommodation + cooking).
Show service tax separately on the invoice.
Calculate service tax as follows:
Description Amount Notes
Gross Amount Charged Rs X Accommodation + cooking fees
Less: Abatement on accommodation 60% of accommodation value Apply only if lump sum
Taxable Value 40% of accommodation + full cooking charge Amount on which service tax is charged
Service Tax @ 15% 15% of taxable value Service tax applicable
5. Summary of your case
Since you lease accommodation and provide it with cooking, your service tax should be on 40% of accommodation value + full cooking charges.
Collect service tax at 15% on this taxable value.
Separate accounting for accommodation and cooking is advisable for clarity.
Invoice should clearly show:
Total amount charged
Break-up of accommodation and cooking (if separate)
Service tax charged separately
Important points:
You need to register for service tax if your taxable turnover crosses threshold limit.
You can avail Cenvat credit on input services used for providing accommodation and cooking service.
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