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2019

GST Rates applicable to Accommodation Services and Restaurants

GST Rates applicable to Accommodation Services and Restaurants

Introduction of GST has benefited the hospitality industry due to standardized and uniform tax rates, and easy and better utilization of input tax credit. GST abolishes several taxes, leading to a reduction in procedural steps and easy availment and utilization of input tax credit. Under the GST regime there will be only a single charge on the bill and it would give the customers a clear picture of the tax they are paying.

However, under GST as well there are multiple tax rates that may be applicable on the accommodation depending on the tariff being charged by the hotel per room per night. Moreover, GST rates applicable to the restaurants which are part of a hotel are likely to be different from other independent restaurants providing dining or take away services.

GST Rates for Accommodation Facility:

  • Accommodation facility includes hotels, inns, guest houses, clubs, campsites or any other commercial places meant for residential or lodging purposes.
  • There is no flat GST Rate for accommodation facility. The rate depends on the value of supply of the accommodation facility. The applicable GST rate may change depending on the value of supply.
  • Value of supply is the Rent Realized per Room per Night.

Refer to the table below to understand GST Rates:

Actual Tariff per Room per Night GST Rate
Less than Rs.1,000 0%
Rs.1,000 – Rs.2,499 12%
Rs.2,500 – Rs.7,499 18%
Rs.7,500 and above 28%

 

Declared Tariff v/s Actual Tariff (Realized Rent):

  • “Declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit.
  • “Actual tariff” is the actual amount paid by the guest per room per night. In practical life hotel tariffs change day by day and season by season. Moreover, many discount and special offers are available on third party websites providing online booking services. Hence, actual tariff (actual rent realized) may be different from the tariff declared by the hotel.
  • For determination of GST rates for accommodation, actual tariff must be taking into consideration and not declared tariff.

 

GST Rates for Eateries and Take Away Restaurants inside a Hotel:

  • GST rates for restaurants run inside hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging the GST rates would either be 5% or 18% depending on the declared tariff of the hotel.
  • If a hotel has rooms with declared tariff of more than Rs. 7500, then the applicable GST on restaurant within such hotels is 18% (with ITC). On the other than, if the declared room tariff is less than 7500, the applicable GST rate would be 5% (without ITC).

 

GST Rate for Eateries and Take Away Restaurants outside a Hotel:

GST rate is 5% (without ITC) for restaurants, eateries, mess, canteen, etc. whether for dine in or take away facility from the premises where such premises is NOT located inside hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging.

Refer to below table:

Type of Restaurant GST Rate
Restaurants within Hotels (declared room tariff <7,500) 5% (without ITC)
Restaurants within Hotels (declared room tariff >7,500 ) 18% (with ITC)
All Restaurants 5% (without ITC)
Outdoor Catering 18% (with ITC)

 

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