Taxation of hotel industries
This query is : Resolved
16 May 2013
would anyone tell me please applicable service tax provision related to hotel industries.....
16 May 2013
26/2012 Abatement
Point 6. Renting of Hotel, inn, guest house, club, campsite or other commercial places meant for Residential or Lodging Purpose. Tax on 60% (renting means lodging of guests)
Point 5. Bundled service of supply of food in a premise with renting of such premise (including. hotel, pandal, sahamiana, or any other place, specially for functions), 70% portion taxable
Point 6. Renting of Hotel, inn, guest house, club, campsite or other commercial places meant for Residential or Lodging Purpose. Tax on 60% (renting means lodging of guests)
Point 5. Bundled service of supply of food in a premise with renting of such premise (including. hotel, pandal, sahamiana, or any other place, specially for functions), 70% portion taxable
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16 May 2013
In first case value of services is Rs.100 then service tax will be levied on Rs.60 only and in 2nd case on Rs.70 only @12.36%...am I right??
26 July 2025
Yes, you’re absolutely right! Here’s a clearer summary for **service tax on hotel industry services** based on the **Notification No. 26/2012-Service Tax (Abatement)**:
---
### 1️⃣ Renting of Hotel, Inn, Guest House, Club, Campsite, or other commercial places for **Residential or Lodging Purpose**
* **Abatement:** 40%
* **Taxable value:** 60% of the rent charged
* **Explanation:** Since renting includes lodging, service tax applies only on 60% of the rent charged.
---
### 2️⃣ Bundled Services of Supply of Food along with Renting of Premises (such as hotel, pandal, etc., especially for functions)
* **Abatement:** 30%
* **Taxable value:** 70% of the total amount charged for the bundled service
* **Explanation:** Since the service is a bundle (renting + food supply), service tax is levied on 70% of the total consideration.
---
### 3️⃣ Service Tax Rate
* The applicable **service tax rate** at that time was **12.36% (including education cess and secondary and higher education cess).**
---
### **Example Calculation:**
| Service Type | Total Value Charged (₹) | Taxable Value (after abatement) | Service Tax @ 12.36% (₹) |
| ------------------------ | ----------------------- | ------------------------------- | ------------------------ |
| Renting only | 100 | 60 (60% of 100) | 7.416 |
| Renting + Food (Bundled) | 100 | 70 (70% of 100) | 8.652 |
---
### **Summary:**
* For renting **only lodging**, tax is on 60% of rent.
* For renting **with food supply bundled**, tax is on 70% of the total amount.
* Rate = 12.36% (including all cesses applicable then).
---
If you want, I can also update this based on the current **GST regime** where service tax has been replaced by GST. Would you like that?
---
### 1️⃣ Renting of Hotel, Inn, Guest House, Club, Campsite, or other commercial places for **Residential or Lodging Purpose**
* **Abatement:** 40%
* **Taxable value:** 60% of the rent charged
* **Explanation:** Since renting includes lodging, service tax applies only on 60% of the rent charged.
---
### 2️⃣ Bundled Services of Supply of Food along with Renting of Premises (such as hotel, pandal, etc., especially for functions)
* **Abatement:** 30%
* **Taxable value:** 70% of the total amount charged for the bundled service
* **Explanation:** Since the service is a bundle (renting + food supply), service tax is levied on 70% of the total consideration.
---
### 3️⃣ Service Tax Rate
* The applicable **service tax rate** at that time was **12.36% (including education cess and secondary and higher education cess).**
---
### **Example Calculation:**
| Service Type | Total Value Charged (₹) | Taxable Value (after abatement) | Service Tax @ 12.36% (₹) |
| ------------------------ | ----------------------- | ------------------------------- | ------------------------ |
| Renting only | 100 | 60 (60% of 100) | 7.416 |
| Renting + Food (Bundled) | 100 | 70 (70% of 100) | 8.652 |
---
### **Summary:**
* For renting **only lodging**, tax is on 60% of rent.
* For renting **with food supply bundled**, tax is on 70% of the total amount.
* Rate = 12.36% (including all cesses applicable then).
---
If you want, I can also update this based on the current **GST regime** where service tax has been replaced by GST. Would you like that?
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