Can an online travel agent (ota) charge gst to hotels in india who are gst exempted?

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 03 October 2018

Yes you are absolutely correct , The OTA cannot collect GST on Room Rent from Hotel because :
1. He is not raising any bill for room rent .
2. He is not providing any service to customer except booking which is being charge in shape of commission from you.
3. He is raising bill for commission only

Hence its better to ask for clarification from OTA under which provision of Act he is liable to collect GST for which he has not made any supplies..

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 07 October 2018

As per Notification 17/2017 CT (R) hereby notifies that in case of the following categories of services, the tax on intra-State supplies shall be paid by the electronic commerce operator (ii) services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act Hence to above said notification its mandatory for E-operator to charge GST on hotel bill

G A J MOL (Mr) (58 Points)
Replied 07 October 2018

Dear Pankal Rawat, thank you for this explanation. The Notification 17/2017 CT (R) is difficult to read but it seems that we, as hotel, have to pay the GST to the OTA who pays it afterwards to the CTO. But in our case this E-operator (booking.com) is not charging any bill to the guest and collecting any money from the guest. We as hotel only do that. Other OTA's like AIRBNB, TravelGuru and others collect the room rent directly from the guest, including 18 % GST, and pay the hotel only the room rent after deducting their commission for their service and the 18% GST only on that commission part. So, still I find it confusing.

SK (NA) (42 Points)
Replied 14 November 2018

Yes. There is a bit of confusion here. As per notification 17/2017 th onus of GST liability is shifted to the e-commerce operator irrespective of whether the 'supplier' , ie, you, is registered or not. However, CGST Act also says such an operator must be registered for GST in all states, if he has presence/office OR appoint an agent who will be liable for GST collection and remittance.

In case of MakemyTrip, AirBnb, Cleartrip, etc...they have taken registration in all states. This is also required to distribute tax among states correctly. Mostly these companies will be charging IGST which is shared between Center and States. So if the operator has no registration in a state and guests book a hotel in that state , the state stand to loose their share in the GST collected if the operator has no registration in that state.

In case of Booking.com , it is quite evident that they seem to have a single registration(registration only since September 2018, dont know what they were doing Since July'2017 when GST was introduced..) under their name Booking.com,BV as a FOREIGN COMPANY in Mumbai (Maharashtra State) and not sure if state(s) GST authorities will agree to it. Ie, all the GST collected will be shared by only Center and Maharashtra State. Moreover, if they are compliant under GST laws, they must charge GST on their commission(service) also which is not the case. They just charge GST on room tariff. Funny to say the least.

My personal investigation into the matter tells me there might be an Income Tax issue also as Boooking.com,BV claims to be a completely Netherlands based company with no PERMANENT ESTABLISHMENT (PE) in India thus EXCEMPT from all Income Taxes in India . Of course, they do not pay a single rupee Income Tax in India on the commission they earn from 55000 propeties in India. However, they have a fully operational ,active subsidiary company registered in Mumbai RoC with a branch in Bangalore. This office actively does all activities like marketing, sales and support on behalf of Booking.com,BV to Indian accomodation providers which might contradict their NO PE claim under Income Tax and Double Taxation Avoidance Agreement between India and Netherlands. So it looks like there is a contradiction between their GST registration and Income Tax aspects (commission earned)..That is another matter altogther..

Moreover, we have the Rs.20 Lac rule. Under 20 lacs one need not be registered for GST but just being listed in a PORTAL like booking.com makes one liable to pay GST on room tariff which these portal collect and one can not charge it to customer without a GST registration.

I am also given to understand, that booking.com says that if you have GST registration , they wont charge you GST . This is also wrong as the notification 17/2017 clearly makes online portals liable for collection of GST.

To say the least, there is a bit of confusion and it is looks as if Booking.com are not fully compliant with the GST Act.

Recently, australia has made it mandatory /liable for booking.com to be fully compliant with GST laws.And on Income Tax many countries have slapped them with claims. Plenty of information available on the internet.

So as far as Booking.com in India is concerned it is a bit cloudy. I am trying to get clarifiations from GST authorities.Stay Tuned.

G A J MOL (Mr) (58 Points)
Replied 19 November 2018

This is the statement of Booking.com regarding GST charging, on behalf of them, by the GST exempted hotel.

I have decided to finish my subscripttion as hotel at booking.com to avoid any problem with the Commercial Tax Office in future when they come and check my accounts.

29 October 2018 - 06:12:51

GST Query 29 October 2018 - 06:12:51

Dear Partner,

As per the advice from our tax team we are writing this to you in regards to your previous message.

Like you we are not pleased with the GST legislation as it stands. Despite multiple inquiries we have had to register for GST as a foreign electronic commerce operator based on Section 9(5) of the CGST Act 2017. As a result, Booking.com BV is obliged to collect and pay in GST on rooms offered via its platform by those partners that are themselves not liable to register for GST (please also see question 4 and 5 in the FAQ issued by the authorities, see: https://cbic.gov.in/resources//htdocs-cbec/gst/faq-e-commerce.pdf ). We've tried (and are still trying) to counter the application of the relevant GST legislation. Especially as these rules increases the prices of certain rooms booked via our platform while these rooms would not be not subject to GST had they been booked without the use of our platform. At present the rules however stand as they are so we are abiding under protest.

With respect to the GST we request you to collect and remit we furthermore kindly note the following.

We understand that other eCommerce operators like us have chosen to (significantly) increase their commission to cover for GST charges. We however do not like this approach for multiple reasons and want to be transparent. Hence, besides our commission, we ask our partners to collect GST from guests and remit it to us. This approach applies as we are currently unable to collect GST from guests directly as we do not (yet) collect payments from guests. This collection method of GST is not a legislative requirement but is a perquisite when doing business with us of which you have been informed via a specific communication (denoting that going forward you would need to collect and remit to us the GST on rooms sold via our platform).

We appreciate that you may not agree to the above described approach of GST collection however, as also communicated, we then take this as your notice to no longer want to work with us. We thoroughly hope this is not the case and are doing everything in our power to make the GST rules less cumbersome for all parties. In this respect please know that in the near future we aim to implement options to collect payments from guests directly (so also the GST amount) and that we are (where necessary) adjusting the price settings of partners on our website to reflect that GST is applicable to the room rates. Consequently, guests will not be up for any surprises and partners can collect the room rate plus GST.

Following your email we acknowledge your written confirmation that regretfully we cannot continue our partnership as you do not wish to collect and remit GST on the rooms booked through our platform. If our understanding is not correct, and you do wish to remain on our platform and will collect and remit the relevant GST to us, please do let us know as soon as possible.

Kind regards,

Credit Control Team. -TAX-

SK (NA) (42 Points)
Replied 19 November 2018

As of now, Notification 17/2017 and Circular No. 27/1/2018-GST takes precedence over everything else however, there still need to be a clarification on the Rs.20.0 Lac EXCEMPTION RULE and thes 2 notifications. I have presonally written to GST authorities and hope to receive an answer..

As for booking.com answer is concerned, this is one of the several standard answers booking.com is passing around.. I have seen 'We are a Foreign Company, no office in India hence no GST registration', ' We have GST registration but it is confidential', etc etc.. and finally they got registered in September 2018.

G A J MOL (Mr) (58 Points)
Replied 27 November 2018

Booking.com has changed his poilicy and is collecting directly the room rent and GST from the guest which books throught their portal from 10 December 2018 onward. I received this announcement:

Booking.com

26 November 2018 - 10:55:40

Payments by Booking.com for non-GST registered partners

On 1 July 2017, the Indian government introduced new GST legislation, that applies to services from electronic commerce operators related to accommodation services. As of 1 July 2017, e-commerce operators are required to collect and remit Indian GST on room rates to the Indian government. This applies if the Indian partner is not liable to register for GST purposes.

 As a result, all Indian partners on Booking.com who are not GST registered will be switched to Payments by Booking.com on December 10th. This means that we will facilitate all guest payments on your behalf and send you payouts net of commission and GST, by bank transfer each month.

Please note that any outstanding amounts due to Booking.com will be deducted from your future payouts before payments are sent to you by bank transfer.

If you are not GST registered

You’ll be switched to Payments by Booking.com on December 10th and you’ll need to add your bank details to receive payouts from Booking.com.

siddaguru (student) (23 Points)
Replied 30 October 2019

dear sir

here booking.com is liable to collect TCS?

Whether Hotel registered under GST TCS collection is ok

if hotel not registered GST (ie below 20 lac) what about TCS

G A J MOL (Mr) (58 Points)
Replied 02 November 2019

Booking.com cancelled the facility payment by booking in India: Indian partners on Booking.com who are not GST registered will be switched to Payments by Booking.com on December 10th. This means that we will facilitate all guest payments on your behalf and send you payouts net of commission and GST, by bank transfer each month.

They returned to their old policy: Hence, besides our commission, we ask our partners to collect GST from guests and remit it to us. This approach applies as we are currently unable to collect GST from guests directly as we do not (yet) collect payments from guests. This collection method of GST is not a legislative requirement but is a perquisite when doing business with us of which you have been informed via a specific communication (denoting that going forward you would need to collect and remit to us the GST on rooms sold via our platform).

Because we are exempted from GST (turnover below 20 lacs) it is illegal to collect GST and forward it to bookin.com Because of that we have frozen our subscripttion with booking.com