Go AD-Free with CAclubindia Pro and get a FREE CCI Coffee Mug. Subscribe Now!

GST on Retention charge

Rangan Biswas (Finance Manager) (37 Points)

22 June 2018

Please inform me wheather GST is applicable or not on retention charge in hotel industry.
Guest has booked the room but not came, if the amount are charged as retention then GST will be applicable or not.

Reply
Follow
Share

6 Replies

Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 22 June 2018

Yes ,.. GST is applicable As per section 15 CGST Act (On the amount you reced as retention charges)

Upgrade to CAclubindia Pro. Subscribe Now!

Bhargav Shiva (Student) (120 Points)
Replied 20 December 2018

Why is GST applicable here when there is no supply at all.

1 Like

Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 21 December 2018

ITS SORT OF PENALTY (THE BREACH OF CONTRACT) HENCE AS PER CLAUSE (D) OF SUB-SECTION (2) OF SECTION 15 OF CGST ACT GST IS APPLICABLE.

Bhargav Shiva (Student) (120 Points)
Replied 22 December 2018

SIr, what you said is regarding penalty or interest whatever collected for delayed receipt of consideration. But here in this is case I dont think the above refered clause applies.

GOVIND RAO (2 Points)
Replied 12 October 2020

Hotel charged @ 12% on availment of accommodation and 18% charged on retention charges as room tariff in both the cases is @ 7000

Upgrade to CAclubindia Pro. Subscribe Now!

Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 15 October 2020

Dear Bhargav

In term of schedule II (5)(e) it's supply of services.

If we refer Section 7 of CGST Act , supply incudes .............. agreed for CONSIDERATION. & If we read the definition of Consideration Section 2(31)(b) the monetary value of any avt or FORBEARANCE in respect of , .........here FORBEARANCE means contractual penalty for not supplying services or goods .

So reading above section in conjoint , the GST attracts.

Note : Yes in case if it is refunded then GST not applicable or Reversed (On advance for supply of services GST Applicable)