In the case of Goods and Services Tax, the hotel’s services are taxable. Even if the guest is a registered individual with a GSTIN from another state, the location of supply will always be the state/union territory where the hotel is located. As a result, a hotel must always charge SGST and CGST. If the hotel is in the same state as the guest, the guest can claim SGST and CGST input tax credits. The same businessmen are now on a business trip to Delhi.
The hotel in Delhi added SGST (Delhi) and CGST to the bill and included the guest’s GSTIN. Because the businessman is not registered in Delhi, he will not be able to claim GST paid as an input tax credit. Tax HelpDesk is your one-stop solution to all your GST-related queries. It is also one of the most reliable online tax filing services in India. Keep reading this blog to explore more.
What is GST (Goods and Services Tax)?
The GST (goods and Services Tax) is a tax that is levied on both goods and services. Many other indirect taxes in India, such as VAT, services tax, and excise duty, have mostly been replaced by it. Parliament passed the Goods and Service Tax Act on March 29, 2017, and it went into force on July 1, 2017. The Goods and Services Tax (GST) is a multi-stage, destination-based tax applied on all value additions in India. The Goods and Services Tax (GST) is a single domestic indirect tax law that applies across the board.
- GST Rate
| Tariff Per Night | GST Rate |
| Less than Rs. 1,000 | No GST |
| Rs. 1,000 to Rs. 7,499 | 12% |
| Rs. 7,500 or more | 28% |
- GST on cancellation charges
When you book a room at a hotel, you usually have to pay a deposit. And, depending on the terms of the agreement, it may or may not be fully refundable. If a guest cancels a reservation, the hotel will charge a cancellation fee and, if applicable, reimburse the remaining sum.
The question now is what the Goods and Services Tax rate will be on such a cancellation charge. In this instance, the cancellation fees will be subject to SAC 99979, and the GST rate will be 18 percent, regardless of the GST rate on the hotel reservation.
Registration Requirement
If a hotelier’s turnover surpasses the turnover limit of Rs. 20/10 lakhs, he or she must register. If a hotel is registered with e-commerce operators such as Goibibo or MakeMyTrip and has a turnover below the threshold, he is not required to register.
Taking Booking From Online Portals
- Hotels are increasingly relying on internet travel agencies such as Goibibo and MakeMyTrip to fill their rooms.
- The e-commerce operator (Goibibo) is required to collect GST on transactions done through it if the hotelier’s revenue is less than 20/10 lakhs and he or she is not registered voluntarily.
- If a hotelier is registered, he or she is required to collect GST directly from customers. TCS is deducted at a rate of 1% from the payment made to the hotelier by the e-commerce operator so online tax filing services in India.
Final Thoughts
All items and services used to provide service can be claimed as input tax credits by the hotel. However, if a hotel has its own restaurant and charges 5% for it, ITC on such a distinct service is not permitted.