Goods and Services Tax (GST) Council has announced that from 18th July hotels that charge under Rs 1,000 a day will also come under the GST net.
According to the press release issued by the GST Council on 29th, 2022, “Hotel accommodation priced up to Rs 1000/day shall be taxed at 12%.” (Still, the government is yet to issue a notification on this matter.) Up until now, GST relief was available for hotel rooms up to Rs 1,000 per day.
From 18th July, 2022, hotel rooms up to Rs 7,500 will charge 12% of GST rate and above Rs 7,501 will charge 18% of GST rates.
“So far, services by a hotel, inn, guest house, club or campsite for residential or lodging purposes, having value of supply of a unit of accommodation below or equal to Rs. 1000 per day or equivalent has been exempt from GST. The GST Council has recommended to withdraw the said exemption and apply 12% GST rate thereon. With this rate amendment, effectively all hotels having declared tariff of Rs. 7500 or below will be liable to GST at the rate of 12 percent. That said, levy of GST on low-cost hotels will make the holidaying more expensive for common man”, Poonam Harjani, Leader, Indirect Tax Research and Advisory, Taxmann.com said.
As per Harjani’s statement small hoteliers may not have to pay the GST rates, “As a respite, very small-scale hotels will still not be covered under GST if their annual revenues are less than taxable limit of Rs 20 lakh”.
“The Government seeks to withdraw the exemption for hotel accommodation priced up to Rs 1000 per day, and as such the said accommodation shall be taxable at 12%. This change has been introduced by the Government to widen the tax base but will increase the cost of end customers in this segment”, Abhishek Jain, Partner, Indirect Tax, KPMG India said.