Taxation of Hotel Services:
Under GST, hotel services are treated as taxable services, and GST is levied on the value of supply. The GST rate applicable to hotel services depends on the tariff per night, ranging from 12% for tariffs between Rs. 1,000 to Rs. 7,499, to 28% for tariffs of Rs. 7,500 or more. However, hotels are required to charge both State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST), regardless of the guest’s state of registration.Place of Supply:
The place of supply for hotel services is determined based on the location of the hotel, irrespective of the guest’s GST registration. Therefore, hotels must charge SGST and CGST according to the rates applicable in the state/union territory where the hotel is located. Guests can avail input tax credit only if the hotel and the guest are registered in the same state.Change in GST Rates:
Prior to 27th July 2018, GST rates for hotels were based on the declared tariff. However, post this date, GST rates are applied based on the actual charges per night. The GST rate is not determined by the star rating of the hotel but solely by the price charged for the accommodation.Cancellation Charges:
Cancellation fees charged by hotels fall under SAC 99979 and attract an 18% GST rate, regardless of the GST rate applicable to the original booking. This ensures uniformity in the taxation of cancellation fees across hotels.Registration Requirement:
Hotels must register for GST if their turnover exceeds the specified limit of Rs. 20/10 lakhs. Even if a hotel is registered with e-commerce operators like Goibibo or MakeMyTrip, registration is not required if the turnover is below the threshold limit.Booking from Online Portals:
Many hotels acquire bookings through online portals, and the taxation process varies based on registration status. If the hotel is registered, it directly charges from clients. However, if the turnover is below the threshold limit, e-commerce operators are liable to collect on transactions made through their platforms.Input Tax Credit:
Hotels can claim input tax credit on goods and services used for providing accommodation services. However, separate services such as restaurant services, taxed at a different rate, may not be eligible for input tax credit.Conclusion:
Navigating the framework for hotel services requires an understanding of the specific rules and regulations governing the sector. By adhering to provisions, hotels can ensure compliance with tax laws while providing quality accommodation services to guests across India. This guide serves as a comprehensive resource, offering insights into the implications for hotels and aiding stakeholders in the hospitality industry to navigate taxation effectively.🚀 Ready to level up your finances? Say goodbye to tax woes with Savingz! 🎉
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