13 February 2018
GST is exempt on accommodation if lodging charges is less than Rs 1000/-. A Guest House charges Rs 500/- as room rent per day, Also food is provided in the guest house costing around Rs 300/- per day. Is GST is needed to be paid on fooding charges or will it come under the exemption block of Rs 1000/- and no GST will be applicable on total charge of Rs 800/-.
13 February 2018
Food provided will not fall under exemption of of accommodation. 5% GST applicable on food if total supply of food in a year exceed 20 lacs.
13 February 2018
In my opinion, providing the accomodation and food would constitute composite supply. Now the principal supply being the accomodation services which is exempted, there will not be any GST applicability on this transaction
26 July 2024
You’re correct in your understanding of how GST applies to accommodation and food charges in the context of composite supply. Here’s a detailed explanation based on GST provisions:
### **1. Composite Supply and GST Exemption**
Under GST, when accommodation and food services are provided together, it typically constitutes a **composite supply**. In a composite supply, the **principal supply** is the primary service provided, and the tax treatment of the entire supply depends on the taxability of the principal supply.
**a. **Principal Supply (Accommodation):** - According to GST provisions, accommodation services are exempt from GST if the room rent is less than ₹1,000 per day. In your case, the accommodation charge is ₹500 per day, which falls below the ₹1,000 threshold. Therefore, this part of the service is exempt from GST.
**b. **Food Charges:** - Food services are generally taxable under GST, but the applicability of GST on food charges depends on whether they are part of the composite supply or provided separately.
### **2. Applicability of GST on Composite Supply**
When accommodation and food are provided together, the supply is considered a composite supply with the principal supply being accommodation. According to GST rules:
- **Principal Supply Exempt:** If the principal supply (accommodation) is exempt, the entire composite supply, including the food component, will also be treated as exempt from GST.
**Explanation:**
- **Accommodation Charges:** ₹500 (exempt from GST as it is below ₹1,000 per day) - **Food Charges:** ₹300 (normally taxable, but since accommodation is the principal supply and it is exempt, the composite supply is also exempt)
### **Conclusion**
In your scenario, since the principal supply (accommodation) is exempt from GST due to the room rent being less than ₹1,000 per day, the composite supply of accommodation and food would also be exempt from GST.
**Therefore, GST is not applicable on the total charge of ₹800 (₹500 for accommodation + ₹300 for food).**
### **Documentation and Compliance**
1. **Invoicing:** - Ensure that your invoice reflects the exemption status clearly. - Mention that the accommodation service is exempt under GST provisions.
2. **Reporting:** - Report the exempt supply in your GST returns (GSTR-1 and GSTR-3B) appropriately.
**Summary**
- **Accommodation Charge:** ₹500/day (exempt from GST) - **Food Charge:** ₹300/day (normally taxable, but part of a composite supply where accommodation is exempt) - **Total Charge:** ₹800 (GST exempt on the composite supply)
You have correctly identified that the provision of accommodation and food together constitutes a composite supply with accommodation as the principal supply, and since it is exempt, the entire supply is exempt from GST.
For any additional or specific queries, consulting with a GST professional or tax advisor is advisable to ensure compliance with the latest regulations and interpretations.
CAclubindia
