Renting of a hotel, inn, guest house, club, campsite, by whatever name called - Service Tax Practice Manual / Ready Reckoner - Service Tax

Chapter 18 Services by a hotel, inn, guest house, club, campsite, by whatever name called (w.e.f. 1st July, 2012) Scope of Exempt Service Notification no. 25/2012 dated 20.06.2012 From 1.7.2012 to 10.7.2014 18. Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of accommodation below rupees one thousand per day or equivalent From 11.7.2014 - Notification No.06/2014 dated 11th July, 2014 18. Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent; Amending Notes w.e.f. 11.7.2014:- According to the present entry at Sl. No. 18, service by way of renting of a hotel, inn, guest house, club or campsite or other commercial places meant for residential or lodging purposes, having a declared tariff of a unit of accommodation below rupees one thousand per day or equivalent is exempt from service tax. Some doubts appears to have arisen on account of use of the word commercial in the entry as to whether dharmashalas, ashram or any such entity which offer accommodation would be covered therein. It may be noted that this exemption, upto the specified threshold level, is available to any entity providing service by way of accommodation, including dharmashalas or ashram or such other entities. To remove any ambiguity, the word commercial‟ is being omitted. Renting of vacant land or buildings for hotels would continue to be taxable irrespective of the hotel‟s declared tariff. After deletion of words commercial places from this entry, Dharamshalas will be covered in this entry and will be exempt from service tax . Meanings and Definitions: 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 does not include any discount offered on the published charges for such unit. Clarification by the Board ( Taxation Guide Guidance Note 7 Exemptions dated 20.06.2012) 7.11.3 What is the significance of declared tariff? Declared tariff is defined in the mega notification. It 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. Its relevance is in determining the liability to pay service tax on renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes as exemption is available where declared tariff of a unit of accommodation is below rupees one thousand per day or equivalent. However, the tax will be liable to be paid on the amount actually charged i.e. declared tariff minus any discount offered. Thus if the declared tariff is ₹ 1100/-, but actual room rent charged is ₹ 800/-, tax will be required to be paid on ₹ 800/-. When the declared tariff is revised as per the tourist season, the liability to pay tax shall be only on the declared tariff for the accommodation where the published/printed tariff is above ₹ 1000/-. However, the revision in tariff should be made uniformly applicable to all customers and declared when such change takes place. Further, see: Restaurant Service- clarification -regarding