I have come to a hotel in ahemedabad for auditing its accounts and have come accross some issues with regard to luxury tax. The hotel is charging fixed luxury tax to the guests on the basis of room categories (like 300 for superior category room, 350 for executive category). Thereby it was able to collect 39 lacs as luxury tax for 3 quaters ending 30/12/2016. However they are making fixed payment to the government on the basis of published rates assuming 50% occupancy, i.e if there are 2 different categories of rooms say 20 superior category rooms and 10 Executive category rooms and the published rates are 5000 and 8000 respectively then they would pay the following tax
20 rooms *5000 * 50% occupancy *30 days *6% luxury tax= 90000
10 rooms * 8000 * 50% occupancy * 30 days * 6% luxury tax = 72000
Thus total luxury tax paid per month is 1,62,000 (dummy figure).
The actual amount of tax paid for 9 months to the government on such basis came out to be 20,00,000.
To sum up, the hotel charged luxury tax of 39 lacs from the guests and paid 20 lacs to the govt. The difference of 19 lacs was later transfered to the misc income account.
As per the hotel finance dept, this process is followed all over ahmedabad. I was unable to find any act/law as a supporting for my query.
Request you to pls provide your inputs on the above issue. (Any extract from a law could be very helpful)