A tour operator is booking hotel for its clients and charging gst on the markup value @ 18% and showing hotel expense as a separate reimbursable components in the biling . However the hotel is biling to the tour operator and charging gst on the total hotel expense @ 18% . Can we claim ITC on the same and if yes in this scenario the ITC would always be greater than the outward on gst. Are we following the correct approach.
e.g we booked a hotel for 1000+18% gst and paid RS 1180 to the hotel and while billing to our client we kept a markup of Rs 200 and billed our client as Rs 200+18% gst = 232+ 1000 ( hotel reimbursement) = Rs 1232 /- . Our outward gst is Rs 32 and the input which we will be getting is Rs 180 . Is our approach correct.
If you are claiming Rs.1180 as reimbursement, then you cannot avail the credit of Rs.180. You can claim Rs.1180 as reimbursement only if you satisfy the conditions of pure agent. If you do not satisfy the conditions of pure agent, then you need to bill your client with Rs.1200 + GST and claim credit of Rs.180.
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