Rate of tax for hotel accommodation – after 37th GST Council’s recommendation

[Shilpi Jain]

The rate of tax for the accommodation services up to 30^th Sep ’19 is as below:

Old rate

Transaction value per unit per day	GST (new rate of tax)
Less than INR 1,000 (per unit)	Nil
INR 1,000 to INR 2,499	12 percent
INR 2,500 to INR 7,499	18 percent
INR 7,500 and more	28 percent

As per the recommendation of the GST Council in its 37^th meeting at Goa, the following would be the rate of tax for the accommodation services provided from 1^st Oct ’19.

New rate

Transaction value per unit per day	GST (new rate of tax)
INR 1,000 and less (per unit)	Nil
INR 1,001 to INR 7,500	12 percent
INR 7,501 and more	18 percent

In this regard the following are the guidelines for the suppliers i.e. hotels to identify the rate of tax to be charged (which is in line with section 14 of the CGST Act, 2017) for the accommodation services.

1. In case a guest stays at the hotel and checks out on or before 30^th Sep ‘19, the service is supplied before the rate change and thereby the rate of tax for the accommodation services provided would be as under.

Table1

S. No.	Issue of invoice	Receipt of payment	Time of supply	Applicable GST rate   structure
1	After 30th Sep ‘19	After 30th Sep ‘19	Receipt of payment or invoice, whichever is earlier	New rate
2	On/before 30th Sep ‘19	After 30th Sep ‘19	Date of issue of invoice	Old rates
3	After 30th Sep ‘19	On/before 30th Sep ‘19	Date of payment	Old rates

2. In case a guest checks into the hotel after 30^th Sep ‘19, the service is supplied after the rate change and thereby the rate of tax for the accommodation services provided would be as under.

Table 2

S. No.	Issue of invoice	Receipt of payment	Time of supply	Applicable GST rate   structure
4	On/before 30th Sep ‘19	After 30th Sep ‘19	Date of payment	New rates
5	On/before 30th Sep ‘19	On/before 30th Sep ‘19	Receipt of payment or invoice, whichever is earlier	Old rates
6	After 30th Sep ‘19	On/before 30th Sep ‘19	Date of issue of invoice	New rates

3. In case if the guest checks in, on or before 30^th Sep ’19 and checks out after such date - on reference to section 14 of the CGST Act, it can be seen that the critical aspect to be answered in such a case is whether the service has been supplied before the rate change or not. Whether it can be said that each day is a separate supply of service or whether the entire period of continuous stay by the guest is one supply.

It can be argued that the scope of service to the guest is the period of stay agreed i.e. starting on or before 30^th Sep ’19 and ending after such date, in which case the supply of service would be said to be done after 30^th Sep ’19 only. Hence the rate of tax as per Table 2 will have to be followed.

However, taking a conservative view in such case, in these kind of situations the hotel could look at treating each day as a separate supply and charge GST as below:

• • Charge GST as per Table 1 above for the days the guest stayed before 1^st Oct ’19, and
  • Charge GST as per Table 2 above for the days the guest stayed on or after 1^st Oct ’19.

However, it would be suggested to wait and see if further clarity in this regard is provided in the notification that would be issued effecting this rate change.

For any further queries/comments please write to [email protected].

Discussions to this article

[Ganeshan Kalyani]

Useful write-up. Thanks for sharing with the reader.

[Ganeshan Kalyani]

It is also requested to the council to look into the difficulty in claiming credit related to hotel stay when the employee travel to another state in search of the possible business. It is also in the case of conference held in another state where the business does not have registration the claim of credit become next to not possible. Considerable credit becomes cost.