Hotel Industry Under GST

CA Mayur Zanwar
Partner: CA Kaloti & Lathiya
: 9422855595
: cazanwar@gmail.com
 WHAT’S INSIDE ?

Introduction to GST

GST Implication

Reverse Charge Mechanism

Input Tax Credit under GST

Registration

Time of Supply under GST

Valuation under GST

 INTRODUCTION OF GST

For Every Business Or Profession , GST Stands For:

G – GOOD (Goods)
S – SIMPLE (Service)
T – TRANSPARENT (Tax)

 Goods and Service Tax (GST) is a comprehensive tax levy on Manufacture,

Sale and Consumption of Goods and Service at a National level.
 GST subsumed various taxes in itself like:
 Service Tax
 Entertainment Tax
 VAT
 Various Cess.
 In India, Dual model of GST is decided to subsumed state as well
as central level taxes.
 GST IMPLICATION

Hotel Industry has various sectors which is covered by GST under different
sections and thus the following sectors are to be covered in this presentation
of hotel industry:

1 Restaurant and Bars

2 Renting of Hall, lawn for different Purpose
3 Lodging
4 Catering & Bundled Services
 GST FOR RESTAURANTS

Restaurants (purely for services

of supply of food only)

Supply of food/drinks in restaurant

Non-A.C. or no A.C or Non-A.C. or

Air Conditioner or having
centralized heating centralized heating
centralized heating at any
at any time during or not at any time
time during the year
the year AND NOT during the year AND
having license to having license to
serve liquor serve liquor
GST @18%
Entry No: 22 of
rate schedule
GST @12% GST @18%
Entry No: 16 of Entry No: 21 of
rate schedule rate schedule
 DOUBTS UNDER ABOVE SERVICES

There were doubts regarding levy of service tax for the following services
which can be carried forward in levy of GST on which no clarification is yet
received

 In a complex where air conditioned as well as non-air

conditioned restaurants are operational but food is
sourced from the common kitchen, will service tax
arise in the non-air conditioned restaurant?

 In a hotel, if services are provided by a specified

restaurant in other areas e.g. swimming pool or an
open area attached to the restaurant, will service tax
arise?

 Whether service tax is leviable on goods sold on MRP

basis across the counter as part of the Bill/invoice.
GST FOR RENTING OF HALLS OR LAWNS

Services of Renting of Hall or

Lawn for any purpose

No bundled services are covered

Renting of Premises or any Renting of Premises or any part of

part of premises like halls or premises like halls or Lawn where
Lawn where Rent is not more Rent is more than Rs.10000
than Rs.10000

GST @18%
GST Exempt Entry No: 36 of rate schedule
Entry No: 73 of
Exemption List
 GST FOR LODGING

Lodging means giving the services of providing the rooms for residential or lodging
purposes having the room tariff as mentioned below:

Sr Particulars Schedule Entry Rate of Taxes

No No
1 Room sale for declared tariff up Entry No:73 of Exempt from Tax
to Rs. 1000 (i.e. less than 1000) Exemption list
2 Room rent for declared tariff Entry No: 17 of 12%
from Rs. 1000 to 2499 Rate Schedule
3 Room rent for declared tariff Entry No: 24 of 18%
from Rs. 2500 to 4999 Rate Schedule
4 Room rent for Rs.5000 or above Entry No: 36 of 28%
Rate Schedule
5 5 star and above rated Hotels Entry No: 32 of 28%
Rate Schedule
GST FOR CATERING & BUNDLED SERVICES

Bundled Services means providing main service along with other services which are
supplementary or complementary to the main services.

Sr No Particulars Schedule Rate of Taxes

Entry
1 Supply of Food/drinks in outdoor catering Entry No:23 of 18%
Rate Schedule
2 Bundled service by way of supply of food or Entry No: 25 of 18%
any other article of human consumption or Rate Schedule
any drink, in a premises together with renting
of such premises
3 Renting of Motor cab Entry No: 06 of 5%
Rate Schedule
4 Supply of Tour operator services Entry No: 10 of 5%
Rate Schedule
 REVERSE CHARGE MECHANISM

Reverse Charge Mechanism is the mechanism where the taxes is to be paid not
by the service providers but by the service receiver. It is opposite to Normal
Charge Mechanism.

• Services received from person located in Non Taxable

18% Territory.

• Services received from a Goods Transport Agency for

5% transport of goods by road.

• Legal Services from an Advocate or firm of Advocates

18%

• Services from Government or Local Authority

18%
 INPUT TAX CREDIT

Input Tax is the GST paid by a taxpayer on purchase of Goods or receipt of

Services for furtherance of his business.

Registered taxable person is not entitled to input tax credit on supply of services
unless he:

Is in possession of a tax invoice, debit note or such other taxpaying document

Services are received or has been taken on the direction of the receiver.

Tax on such services are deposited with the Government or utilized as the Input-
Tax Credit admissible in respect of the said supply.

He has furnished return as per section 27 i.e. GSTR 3.

 REGISTRATION UNDER GST (1/2)

Answers to many Questions are hereby given as follows:

1. What is Limit?
Ans: Registration is required if aggregate turnover in an financial year exceeds
Rs. 20 lakhs.

2. What is the Time-Limit for Registration?

Ans: The assessee must get himself register within 30 days from the date when it
become liable to Register.

3. What is the scene of Registration if services are provided in more than 1 states ?
Ans: If the Distributor or Exhibitor provides his services in different states, every
distributor or exhibitor in every state need to take registration under every states
separately.

4. What if the you are allready registered under existing law?

Ans: There is no need to take separate registration under GST. But the assessee
has to submit documents as may be prescribed within the time limit as may be
prescribed.
 REGISTRATION CERTIFICATE

On Registration, Registration Certificate shall be issued within prescribed form.

Unique identity Number (UIN) is granted/issued from effective date of

registration.

The person shall be Deemed to be Registered if:

i. Registration is not done by Department within prescribed time. AND

ii. Registration is not rejected within prescribed time by the Department for any
valid clause.

The taxpayer will be allotted a State wise, PAN based, 15 digit Goods and / or
services Taxpayer Unique Identification Number (GSTIN). The various digits in
the GSTIN will denote the following:-
State PAN Entity Blank Check Digit
Code Code
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
TIME & VALUE OF SUPPLY OF SERVICES-GENERAL PROVISION

SELLE

Section 13 decides the Time & Value of Supply of SERVICES
R
Time of supply of service shall be:

Where invoice is issued
timely
Invoice date or payment
date whichever is earlier
Where invoice not issued Where no record of invoice
timely is available
Completion date or
Date on which recipient shows
supply date whichever
the receipt of service in his
is earlier
books of accounts

Date of payment : payment is enter in books of supplier or date on which the

payment is credited to his bank account whichever is earlier

NOTE: Time within which invoice should be issued by the supplier of

service is not yet prescribed by the Govt.
TIME & VALUE OF SUPPLY OF SERVICES-GENERAL PROVISION

To understand the above provision the following example is quoted:

Situation Date of completion Date of Date of Date on which Time of

of service invoice payment recipient supply of
shows the service
receipt of
service
Invoice issued within 16.04.17 20.04.17 28.04.17 21.04.17 20.04.17
prescribed
period of completion
of service
Invoice issued after 16.04.17 16.08.17 28.04.17 28.04.17 16.04.17
the prescribed
period of
completion of service
 VALUATION OF SERVICES

For paying GST, Assessee has to determine the Assessable value services and then
SELLE
apply the rate of GST on such assessable value.
R

The formulae for the same is: AV * ROT

For determining such assessable value under different situations, Valuation Rules are
prescribed under the law.
Conditions: 1. Transaction of supply of services having a definite consideration
2. Between two parties who are not relatives.
3. That price is the sole consideration.

If all the 3 conditions are satisfied If all the 3 conditions are not
satisfied
Value of supply= Transaction value as per Value of supply= Value determined as per
Section 15(1) GST Valuation Rules
 CA Mayur Zanwar CA Nikhil Malaiya
Cell: 9422855595 Cell: 9545727818

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Special Thanks :
Ms. Rupal Ganediwal for penning down our views and thoughts on the above topic.