Hi, one of my client engagement in the business hotel room accomodation services. Currently he has taken a property on lease and listed it on oyo for room accomodation services, he charges 12% GST on bills. Oyo charges 35% commission plus 18% GST on it, also he pays 18% GST on lease rent. But after 56th GST council meeting he fall under 5% GST without ITC. My queries are
A. Whats treatment of existing ITC.
B. Is he liable to pay GST RCM on rent (as he can't avail its ITC)
Your business (hotel room accommodation services) falls under the 5% GST rate without Input Tax Credit (ITC). The treatment of existing ITC (Input Tax Credit) accumulated before this change would typically need to be reversed or adjusted as per GST rules when the taxpayer moves to a scheme where ITC is not available. The client may need to reverse the ITC attributable to the stock of inputs, input services, and capital goods as on the date of transition to the 5% GST rate without ITC.
The client pays 18% GST on lease rent. If the client can not avail ITC under the new 5% GST rate without ITC scheme, they still need to pay GST on the leave rent under the Reverse Charge Mechanism (RCM) if the landlord is not registered under GST or if the service is eligible for RCM. However, since the client is paying 18% GST on lease rent (implying the landlord is registered and charging GST), the client would be paying this GST and earlier could have claimed ITC. Now , under 5% GST without ITC, the client can not claim ITC on this GST paid on lease rent.
CAclubindia
