Hotel rooms
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
10 February 2015
We are starting a new Hotel and Boarding unit. We are having non A/c Veg Restaurant and A/c non veg Restaurant. We are charging Rs 800 and Rs. 1200 as room rent. How the Service Tax will be applicable to us and on which amount it is levied? Please guide me in this regard.
10 February 2015
Declared tariff of less then Rs 1000/- are exempt from Service tax and above Rs 1000/- is liable for service tax. However there is abatement on it of 40% on tariff above Rs 1000/-
Querist : Anonymous
Querist :
Anonymous
(Querist)
10 February 2015
So no need to pay service tax on rooms having rent of 800 right. i need to pay service tax on rooms having rent 1200 only know.
28 July 2024
When it comes to the applicability of Service Tax (now GST under GST law), the tax treatment of hotel accommodation and restaurant services can be complex. Let's break down how Service Tax (now GST) applies to your new hotel and boarding unit based on the room rates provided.
### **1. Service Tax Applicability (Before GST)**
Under the old Service Tax regime (before July 1, 2017, when GST was implemented):
- **Service Tax on Hotel Accommodation:**
- Service Tax was applicable on the room tariff for hotels and boarding units.
- There was an exemption limit based on the tariff charged. For hotel rooms with a tariff of up to ₹1,000 per day, Service Tax was not applicable.
- For hotel rooms with a tariff above ₹1,000 per day, Service Tax was applicable.
Therefore, under the Service Tax regime, you would have needed to pay Service Tax only on the room tariff exceeding ₹1,000. In your case:
- For rooms charging ₹800, no Service Tax was applicable.
- For rooms charging ₹1,200, Service Tax was applicable.
### **2. GST Applicability (Post July 1, 2017)**
Under the GST regime, which replaced Service Tax:
- **GST on Hotel Accommodation:**
- GST is applicable on the supply of services, including hotel accommodation.
- GST rates for hotel accommodation are based on the room tariff.
As per the GST rules:
- **For Room Tariffs up to ₹1,000 per day:** No GST is applicable.
- **For Room Tariffs between ₹1,000 and ₹7,500 per day:** GST at the rate of 12% (with the option to avail input tax credit).
- **For Room Tariffs above ₹7,500 per day:** GST at the rate of 18% (with the option to avail input tax credit).
In your case:
- For rooms charging ₹800, GST is not applicable.
- For rooms charging ₹1,200, GST at 12% is applicable.
### **3. Summary of GST Implications**
- **Room Rate of ₹800:**
- GST is not applicable since the tariff is below ₹1,000 per day.
- **Room Rate of ₹1,200:**
- GST at 12% is applicable. The tax is computed on the room rent of ₹1,200.
### **4. Restaurant Services**
For the restaurant services (non-AC Veg and AC Non-Veg):
- **For Non-AC Restaurants:**
- GST is applicable at the rate of 5% without the option to claim input tax credit.
- **For AC Restaurants:**
- GST is applicable at the rate of 18% with the option to claim input tax credit.
### **5. Practical Considerations**
- Ensure that your invoicing reflects the GST rate applicable based on the room tariff.
- Maintain proper records of the GST collected and paid.
- Regularly review GST notifications and updates from the GST authorities to ensure compliance with the latest regulations.
### **6. Documentation and Compliance**
- **Tax Invoice:** Issue a tax invoice for room rents and restaurant services indicating the GST rate applied.
- **Input Tax Credit:** If applicable, claim input tax credit for GST paid on inputs used in providing services.
### **Conclusion**
To summarize, under the GST regime:
- You are required to charge 12% GST on room tariffs of ₹1,200.
- No GST is applicable on room tariffs below ₹1,000.
For restaurant services, the GST rates depend on the type of restaurant and whether it is AC or non-AC.
For accurate compliance and updates, it’s advisable to consult with a tax professional or GST consultant.
### **1. Service Tax Applicability (Before GST)**
Under the old Service Tax regime (before July 1, 2017, when GST was implemented):
- **Service Tax on Hotel Accommodation:**
- Service Tax was applicable on the room tariff for hotels and boarding units.
- There was an exemption limit based on the tariff charged. For hotel rooms with a tariff of up to ₹1,000 per day, Service Tax was not applicable.
- For hotel rooms with a tariff above ₹1,000 per day, Service Tax was applicable.
Therefore, under the Service Tax regime, you would have needed to pay Service Tax only on the room tariff exceeding ₹1,000. In your case:
- For rooms charging ₹800, no Service Tax was applicable.
- For rooms charging ₹1,200, Service Tax was applicable.
### **2. GST Applicability (Post July 1, 2017)**
Under the GST regime, which replaced Service Tax:
- **GST on Hotel Accommodation:**
- GST is applicable on the supply of services, including hotel accommodation.
- GST rates for hotel accommodation are based on the room tariff.
As per the GST rules:
- **For Room Tariffs up to ₹1,000 per day:** No GST is applicable.
- **For Room Tariffs between ₹1,000 and ₹7,500 per day:** GST at the rate of 12% (with the option to avail input tax credit).
- **For Room Tariffs above ₹7,500 per day:** GST at the rate of 18% (with the option to avail input tax credit).
In your case:
- For rooms charging ₹800, GST is not applicable.
- For rooms charging ₹1,200, GST at 12% is applicable.
### **3. Summary of GST Implications**
- **Room Rate of ₹800:**
- GST is not applicable since the tariff is below ₹1,000 per day.
- **Room Rate of ₹1,200:**
- GST at 12% is applicable. The tax is computed on the room rent of ₹1,200.
### **4. Restaurant Services**
For the restaurant services (non-AC Veg and AC Non-Veg):
- **For Non-AC Restaurants:**
- GST is applicable at the rate of 5% without the option to claim input tax credit.
- **For AC Restaurants:**
- GST is applicable at the rate of 18% with the option to claim input tax credit.
### **5. Practical Considerations**
- Ensure that your invoicing reflects the GST rate applicable based on the room tariff.
- Maintain proper records of the GST collected and paid.
- Regularly review GST notifications and updates from the GST authorities to ensure compliance with the latest regulations.
### **6. Documentation and Compliance**
- **Tax Invoice:** Issue a tax invoice for room rents and restaurant services indicating the GST rate applied.
- **Input Tax Credit:** If applicable, claim input tax credit for GST paid on inputs used in providing services.
### **Conclusion**
To summarize, under the GST regime:
- You are required to charge 12% GST on room tariffs of ₹1,200.
- No GST is applicable on room tariffs below ₹1,000.
For restaurant services, the GST rates depend on the type of restaurant and whether it is AC or non-AC.
For accurate compliance and updates, it’s advisable to consult with a tax professional or GST consultant.
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