Have you ever wondered what is the GST on hotel rooms? Or How much actually you have to pay as GST in your hotel booking? A year ago, I too didn’t know how GST was calculated for hotel rooms and always ended up paying an extra amount as GST.
Being a customer of hotels and using their services, it is a must to know how much GST on hotel rooms are charged. In that way, you will be able to actually calculate if they have charged you the right amount or some random amount.
In this post, we will be learning about GST law and different slabs of GST on hotel rooms.
What Is The GST On Hotel Rooms?
Before going into that, let me give a brief description of what GST is.
Gst stands for Goods and service tax. It is an indirect tax lived on goods and services in India and has replaced a number of indirect taxes since the day it came on effect. It is one indirect tax for the whole country.
Now coming back to our point of discussion ‘What is the GST on hotel rooms booking’.
Gst for hotel rooms is charged on the declared room tariff.
The declared tariff is the actual tariff for all the amenities and services provided during a stay, excluding any type of discount in the booking amount.
For example, If the Actual tariff of the room is 9000₹ but due to offseason, you got the room for 5000₹. So here the declared room tariff is 9000₹ and GST will be calculated according to it.
Important: Note that the GST rate is decided on Declared room tariff but is calculated on the actual amount charged from the customer. Consider the following rates slab.
4 Different Rates of Gst on hotel rooms based on declared room tariff.
Declared Tariff GST
0 – 999₹ NIL
1000₹- 2499₹ – 12% of the Declared room tariff [ITC Credit allowed]
2500₹- 7499₹ – 18% of the Declared room tariff [ITC Credit allowed]
7500₹ and above – 28% of the Declared room tariff [ITC Credit allowed]
You can know more about ITC Credit here.
These GST rates are also applicable for inns, guest houses, clubs or any other commercial places.
Now coming back to the previous example, where the actual tariff of the room was 9000₹ but due to offseason, you got the room for 5000₹.
The GST charges for your stay will be 28% of 5000₹ =2800₹
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Things To Keep In Mind:
- The declared tariff is only used to determine the GST rate slab, you need to pay for the actual transaction amount only.
- Tariff amount found on the hotel website or the pamphlet at the hotel reception will be considered as the declared tariff. In case tariffs are different for a different season, both should be mentioned exclusively.
- If the tariff of the room changes frequently, GST will be calculated as per the rates at the time of delivery of service.
GST For Other Hotel Room Services
Gst For Food During Your Stay
If the cost of food is included in your stay(included in declared price), then you will pay GST for both together, but if Food cost is not included in the accommodation, then you will have to pay GST for it separately.
In case you ask for an additional bed and the cost increases because of it, then also you will pay as per the declared price of the room.
for example: if the room 2000₹ [12% GST slab] but due to the additional bed, but because of an additional bed, cost increases to 3000₹. So now the final GST amount you need to pay is 12% of 3000₹.
GST For Seasonal Tariff
It is common that the price of the hotel rooms is more in the peak tourist time in a particular season as other months of the year. Some hotels have fixed different charges for different seasons. In that case, the GST is calculated according to the declared tariff for that season.
For example, Room tariff is 2000₹ in the summer but 3000₹ in winter. So the, when it is summer GST, will be calculated according to 12% slab and in winter Gst will be calculated according to 18% slab.
Upgrades At Lower Rates
If the upgrade in the room is provided at the lower rate then Gst will be calculated according to the upgraded room. For example, if you got an upgraded room of 8000₹ (28% slab ) but you need to pay only 6000₹ for that. In that case, the GST will be calculated as follow:
GST= 28% of 6000₹.
These were some general information regarding GST on hotel rooms. I hope this post will be helpful in determining GST on your future hotel bookings. You can get to know more about it on blog.ritulpatwa.com
If you got any question, do comment in the comment box and I will try to answer them as quickly as possible.
1 thought on “How To Calculate GST On Hotel Rooms”
My annual hotel business turn over is less than 20Lacs, Room rent is Rs. 1500/- per day. Am I exempted to pay GST or I have to make Tax invoice with gst @12%.
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