GST Council accepts ‘transaction value’ to tax hotel tariff : 31-07-2018

You will now not be charged at higher tax rate for your hotel stay with the Goods and Services Tax Council finally accepting ‘transaction value’ for determination of leviable tax rate.

Hotel industry had lobbied hard for this change since the GST roll out in July last year.

Use of ‘declared tariff ’ for determination of tax rate meant that customers had to cough up tax at higher rate even if room tariff charged fell in lower slab. There are three slabs for hotels — 12, 18 and 28%.

The centre and the states have notified the change replacing ‘declared tariff ’ with ‘value of supply’ which is equivalent to transaction value.

However, experts are flummoxed at the change being restricted to room tariffs and not extended to restaurants inside hotels.

Hotels face three rate slabs — first one is for Rs 1,000 and Rs 2,500 per day room tariff at 12% with input tax credit; second is for those having per day room tariff above Rs 2,500 but less than Rs 7,500 at 18% with input tax credit; third is for five stars and those with room tariffs above Rs 7,700 at 28% with input tax credit.

Under the previous regime one had to pay GST at the rate of 28% if the declared tariff of the room was more than Rs 7,500 even if he had paid less as usually final room tariffs are lower on account of discounts.

The latest change has corrected this situation.

Source : Economic Times

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