STUDY ON IMPACT OF GST ON HOTEL

SERVICE INDUSTRY
(FOOD AND HOUSE-KEEPING SERVICE)

IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR MASTER OF
MANAGEMENT STUDIES (UNIVERSITY OF
MUMBAI)

2021-23

DARSHAN RAJENDRA BHANAGE

ROLL N.O – C43

SUBMITTED TO:
DR. V.N. BEDEKAR INSTITUTE OF
MANAGEMENT STUDIES, THANE
 DECLARATION BY THE CANDIDATE

This is to certify project report entitled “STUDY ON IMPACT OF GST

ON HOTEL SERVICE INDUSTRY (FOOD AND HOUSE-KEEPING
SERVICE)” which is submitted by me in partial fulfilment of the
requirement for the award of Master of Management Studies
(University of Mumbai) Dr V.N. BEDEKAR INSTITUTE OF
MANAGEMENT STUDIES, comprises of my original work and due
acknowledgment has been made in the text to all other material
used.

Wherever references have been made to intellectual properties of

any individual / Institution / Government / Private /Public Bodies/
Universities, research paper, text books, research monographs,
archives of newspapers, corporate, individuals, business/
Government and any other source of intellectual properties viz.,
speeches, quotations, conference proceedings, extracts from the
website, working paper, seminal work et all, they have been clearly
indicated, duly acknowledged and included in the Bibliography.

______________________________
Date & Signature of candidate
 CERTIFICATE BY THE GUIDE
This is to certify that project report entitled “STUDY ON IMPACT OF
GST ON HOTEL SERVICE INDSUTRY (FOOD & HOUSE-KEEPING
SERVICE)” which is submitted by Darshan Rajendra Bhanage in
partial fulfilment of the requirement for the award of Master of
Management Studies, (University of Mumbai) Dr V.N. BEDEKAR
INSTITUTE OF MANAGEMENT STUDIES, is a record of the candidate’s
own work carried out by him under my guidance. The matter
embodied in this report is original and due acknowledgement has
been made in the text to all other material used.

Authorized Signatory:
Date:
 Acknowledgement

The internship opportunity I had with “Shree Sai Tax Solutions Pvt
Ltd”, was a great chance for learning and professional development.
Therefore, I consider myself as a very lucky individual as I was
provided with an opportunity to be a part of it. I am also grateful for
having a chance to meet so many wonderful people and
professionals who led me though this internship period.
The success of any task lies in the effective input, but this
cannot be obtained without proper guidance of the concern
authorities and their co-operation. I would like to thank Prof.
MAHESH BHANUSHALI for guiding me throughout the project.
I would also like to thank my parents and member of family
for their kind co-operation and encouragement which help me in
completion of this project.
I wish to acknowledge those many people whose feedback
has enable me to satisfactorily complete my summer internship.

Thank you
Table Of Content

Sr No. Particulars Pg no
1 Executive Summary
2 Objective
3 Introduction
a. Overview
b. GST bifurcation
4 Industry Analysis
a. Size of industry
b. Major players in the industry
c. Market Share
d. Challenges faced
5 About the company
a. Introduction
b. Vision and mission statement
c. Product and Services
d. SWOT Analysis
e. Challenges faced by the company
6 On job training
a. Key result area
b. Work Responsibilities
c. Project execution methodology
d. Technical/Managerial skills gained
7 Research methodology
a. Impact
b. Literature Review
c. Data collection
d. Primary data
e. Secondary data
8 Data Analysis
a. Interpretation
b. conclusion
c. Suggestion
d. References
EXECUTIVE SUMMARY

This study aims at finding out the impact of GST on Hotel Service
Industry. Further this study focuses on the understanding the
concept of GST which includes framework of GST, understanding
what are the changes made in the tax rates on goods as well as
services. In order to find out impact of GST on hotel service providers
the survey is conducted to collect the data. For collecting the data I
had referred the online articles and research papers, and also from
talking to suppliers, vendors and customers. That questionnaire filled
from various hotel service providers who provide food and
housekeeping services. The data that is collected from the
questionnaire is then analysed using the pie charts to arrive at
conclusion which will result into achieving the objectives of the
study.
OBJECTIVES

1. To study the impact of GST on Hotel Service Industry (Food &

Housekeeping services).
2. To study previous and present tax structure in India.
3. To study the framework of GST
4. To create awareness among people who are engaged in the
hotel service industry.
 INTRODUCTION
OVERVIEW ON IMPACT OF GST IN HOTEL INDUSTRY
The hotel industry has regularly been under the scanner since
demonetization. This industry in India is on constant growth and is
now impacted with GST- Goods and service tax. Hence, we thought
of giving you a detailed impact analysis about GST on the hotel
industry. If we talk of GST in simple terms, it is going to make luxury
hotels and restaurants unhappy since they are likely to be more
impacted and will have to pay whopping 28% GST tax.
GST BIFURCATION AS PER RESTAURANT
• Small restaurants – 5%
• Non-Ac restaurants – 12%
• Ac restaurants – 18%
• Five Star restaurants
Considering the standard rate of 18% of GST, every restaurants
bill payer can save around Rs55 on the bill of Rs2200. If we see
the effective rate of tax under current system, it ends up to
around 20.5%, which will come down to 18% with the GST
effect. According to the latest GST update budget, hotels that
are charging Rs 1000 per day for rooms are exempted from
taxes.
 INDUSTRY ANALYSIS
SIZE OF THE INDUSTRY
The hotel industry is a subdivision of the hospitality industry that
specializes in providing customer and accommodation services.
There are a variety of hotel types that typically can be categorized by
size, function, service, and cost. The hotel industry market size
worldwide saw growth up until the start of the coronavirus (covid-
19) pandemic in 2020 when the market size dropped considerably.
The industry was forecast to grow to 950 billion U.S. dollars in 2021,
however, this figure still was still not predicted to reach pre-
pandemic levels.

MAJOR PLAYERS IN THE INDUSTRY

1. HYATT HOTELS CORPORTION
Hyatt hotels corporation is an American multinational operator,
owner, and franchiser of resorts, hotels, and vacation
properties. It is headquartered in Hyatt centre, Chicago, Illinois.
Its different brands are Park Hyatt, Andaz, Hyatt centric , Ziva,
Hyatt Hotels, Residence club etc. One of its popular hotel is
located in Mumbai.

2. MARRIOTT INTERNATIONAL INDIA PVT LTD

Marriott International was founded in the year 1927. It is
headquartered in Bethesda, Maryland. Marriott was founded
by John Willard Marriott in 1927 when he and his wife, Alice
Sheets Marriot, opened a root beer stand in Washington D.C.
Marriott International was formed in 1993 when Marriott
Corporation spilt in two companies, Marriott International and
Host Marriott Corporation. It is one of the top hospitality
companies in India.
3. TAJ HOTELS
Taj Hotels Resorts and Places was founded in the year 1903. It
is headquartered in Nariman Point, Mumbai, Maharashtra. It
was founded by Jamshedji Tata. It is one of India’s largest
business conglomerates and top 10 Hospitality Companies in
India. Jamshedji Tata, the founder of the Tata Group, opened
the Taj Mahal Place, a hotel in Mumbai overlooking the Arabian
Sea, on 16 December 1903.

4. THE LALIT HOTELS

The Lalit Suri Hospitality Group is India’s leading hotel
company. The company is headquartered in New Delhi. Its first
hotel was founded in the year 1988 by Mr Lalit Suri. The
branches of leading hospitality company is located in all top
Indian cities including New Delhi, Mumbai, Chandigarh,
Udaipur, Kolkata, Bangalore etc.

MARKET SHARES OF MAJOR PLAYERS

1. Hyatt hotels
2. Marriott International

3. The Taj Hotels

4. The Lalit Hotels

CHALLENGES FACED BY THE INDUSTRY

• Indian Government Taxation Policies
• Debt funding by the Indian Banks
• Licensing Issues
• Technology Related Issues
• Human Resource Management
• Safety & Security
 ABOUT THE COMPANY
INTRODUCTION
Shree Sai Tax Solutions Pvt Ltd is a 14 years & 6 months old private
company. It is incorporated on 07 Jan 2008. It’s a company limited by
shares having an authorized capital of Rs 2,00,000 & a paid up capital
of Rs 2,00,000 as per Ministry of Corporate Affairs (MCA).

VISION & MISSION STATEMENTS

MISSION
• To provide exceptional financial & professional services while
maintaining the highest levels of integrity.
• To meet the current & future needs of our clients and help
them to cultivate long-term success.

VISION
• To be regionally recognized as the accounting firm of choice for
providing comprehensive financial & professional services to
individuals & businesses.

PRODUCT & SERVICES

▪ INTERNAL AUDIT
▪ TDS RETURN
▪ ONLINE REGISTRATION & RETURN FILLING
▪ LOWER TDS REGISTRATION
▪ EXEMPTIONS FOR DONATIONS
▪ CAPTIAL GAIN WORKING
SWOT ANALYSIS
STRENGHTS
The staff you employ in your bookkeeping or tax business a
strength-particularly if you have skilled, experienced employees
with specialized qualifications such as Certified Public
Accountants, or CPAs. Another strength of the tax or bookkeeping
business is the relatively low operating expense and overhead and
resulting high profit margin.

WEAKNESSES
A significant weaknesses of the tax preparation business in
particular is the highly seasonal nature of the work. This industry
requires long hours at tax time, but the availability of year-round
work is extremely limited and can make it difficult for the business
to retain qualified staff.

OPPORTUNITIES
An opportunity for both tax and bookkeeping businesses is to
combine functions to provide additional business opportunities
year-round. The creation and sale of proprietary tax or
bookkeeping software can also help to generate residual income
during the off-season.
THREATS
Significant external threats exist in the tax and bookkeeping
industry. Easy internet- based programs simplify the process for
the user and remove the need for many people to seek out
specialized tax or bookkeeping services.

CHALLENGES FACED BY THE COMPANY

▪ Lack of clarity on GST provisions (Rules & Regulations)
▪ Increased compliance, with increase in the number of returns
to be filled annually.
▪ Lack of skilled resources & need for re-skilling
▪ Policy challenges
▪ New business models
▪ Technology issues
▪ Changing relationships with clients
 ON THE JOB TRAINING
KEY RESULT AREAS
Understanding work of 2 companies
I. DIVYA SEA FOODS (HOTEL)
II. JAI ENTERPRISES (HOUSEKEEPING SERVICES)
Both the companies are registered as private limited company. The
key result was doing the Basic Accounting Entries in Tally Erp.9
system
• Recording Receipts & Payments on daily basis
• Preparing Sales and Purchase Invoices on monthly basis
• Basic GST working of 2 companies
HOW TDS APPLICABLE
It was classified by mainly two aspects:-
I. SERVICES
In services TDS is always applicable. For individual 1% TDS
applicable which is deducted in taxable value of total
service received section 194c. For company firm 2% TDS
applicable which is deducted in taxable value of total
service received.

II. MATERIALS
No TDS is applicable but should be confirmed if the
material is capital asset or not/ if material is capital asset
than material should be booked as a fixed asset and also
charge respective depreciation as per Companies Act.
 WORK RESPONSIBILITES ASSIGNED
I. GSTR-1 PAYMENT
FORM GSTR-1 is a monthly statement of outward supplies to be
furnished by all normal and causal registered taxpayers making
outward supplies of goods & services or both & contains details
of outward supplies of goods & services.
We can opt for quarterly filing of FORM GSTR-1 under the
following condition:-
If our turnover during the preceding financial year was up to Rs
1.5 crore or
If you are registered during the current financial year & expect
our aggregate turnover to be up to Rs 1.5 crore.
The following details of a tax period have to be furnished in
FORM GSTR-1:-
▪ Invoice level details of supplies to registered persons
including those having Unique Identification number.
▪ Invoice level details of inter-state supplies of invoice value
greater than Rs 2,50,000 to unregistered persons
(consumers).
▪ Details of Credit/Debit Notes issued by the supplier
against invoices
▪ Summary details of advances received in relation to
future supply and their adjustment.
▪ Nil rated, exempted & non-GST supplies; &
▪ HSN/SAC wise summary of outward supplies.

Pre-requisites for filing FORM GSTR-1

 ▪ The taxpayer should be a registered taxpayer & should
have an active GSTIN during the tax period for which
FORM GSTR-1 has to be furnished.
▪ The taxpayer should have valid login credentials such as
(User ID & Password) to login in to GST portal;
▪ The taxpayer should have an active and non-expired/
revoked digital signature (DSC), in case the digital
signature is mandatory.
▪ In case taxpayer wants to use EVC, they must have access
to the registered mobile number of the Primary
Authorized Signatory.

GSTR-3B PAYMENT
▪ The GSTR-3B is a consolidated summary return of inward &
outward supplies that the Government of India has introduced
as a way to relax the requirements for businesses that have
recently transitioned to GST.
▪ Since a lot of small & medium businesses have been using the
manual accounting methods, filing returns within the July 2017
deadlines would be difficult for many of these businesses.
Hence, from July 2017 to June 2018, tax payments will be based
on a simple return called the GSTR-3B.
▪ Starting from 1st Jan 2021, small taxpayers with aggregate
turnover of less than 5 crores can file quarterly GSTR-3B. Tax
liability will be auto populated from GSTR-3B TO GSTR-1 while
filing returns.

Prerequisites for filing GSTR-3B

▪ The GSTR-3B FORM should be submitted by any business that
is liable to file the monthly returns GSTR-1, GSTR-2 & GSTR-3B.
 ▪ The GSTR-3B FORM can be easily filed online through the
GSTN portal. The tax payable can be paid through challans in
banks or online payment.
▪ We either need an OTP from your registered phone to verify
our return using an EVC (Electronic Verification Code) or a
digital signature certificate (of class 2 or higher). We can also
file your GST returns using an Aadhar based e-sign.

HOW WE CAN FILE GSTR-3B

▪ Details of your sales & purchases which are liable for reverse
charge.
▪ Details of Inter-state sales made to unregistered buyers, buyers
registered under the composition scheme, & UIN (Unique
Identification Number) holders.

PROJECT EXECUTION METHODOLOGY

▪ Coordinate with Vendors.
▪ Reconciliation with our company Ledger.
▪ Payroll management.
▪ Reconciliation of Bank Statement.

TECHNICAL / MANAGERIAL SKILLS GAINED

▪ Posting accounting entries in TALLY ERP9
▪ Basic GST Working
▪ Understand TDS calculation for Various Establishment.
 RESEARCH METHODOLOGY
INTRODUCTION OF RESEARCH METHODOLOGY
The aim of this chapter is to discourse the method used in the
research. It is also a vital component in order to achieve the
objective of the decisions, clear, accurate and reliable. In this chapter
also, we can see the step is generally adapted to know how to collect
analysis and interpretation of data. It covers the aspects of research
process, technique to development of instrument which data
analysis has adopted.

IMPACT ON HOTEL INDUSTRY

Section 4 deals with GST influence hotels and restaurants. Those
restaurants whose annual turnover less than Rs.50 lakh, GST is 5%.
Dinner in Non-a/c small restaurants is 12% Dinner in a/c restaurants
is 18% (eating with liquor license). Dinner in 3 star or 5 star is 28%.
All the above said hotels, inns, guesthouses, clubs, campsites or
other commercial places, grant homes, vilas input tax credit
available. At present the hotels are impacted by multiple taxes.
There are three taxes levied on hotel, which are VAT, luxury tax by
state and service tax by centre. These taxes goes up to 28% after
implementation, multiples taxes would replaced by one single tax 17
to 19%.

LITERATURE REVIEW
The proposed GST is likely to change the whole scenario of current
indirect tax system. It is considered as biggest tax reform since 1947.
Currently, in India complicated indirect tax system is followed with
imbrication of taxes imposed by unions and states separately. GST
will unify all the indirect taxes under as umbrella and will create a
smooth national market. Expert says that GST will help the economy
to grow in more efficient manner by improving the tax collection is it
will disrupt all the tax barriers between states and integrate country
by single tax rate.
GST was first introduced by France in 1954 and now it is followed by
140 countries. Most of the countries followed unified GST while
some countries like Brazil, Canada follow a dual GST system where
tax imposed by central and state both. In India also dual system of
GST is proposed including CGST and SGST.

• Vineet Chauhan (2017)

Conduct a study on “Measuring Awareness about implementation
of GST”. A study survey of small business unit of Rajasthan State in
India. The study seeks to evaluate the awareness of the business
owners about GST difficulties they face to encase of the current
awareness about it. 148 small business owners were analyses in
order to identify the awareness about GST from Rajasthan State
and the kind and extent of relief provided and the implementation
of the provisions under GST law.
• Times of India (26 July 2017)
In it stated that sweet makers are confused with fixing the tax for
their products as the ingredients used in the sweets are taxed
separately as raw material and as finished goods the products its
taxing is different ex. Plain burfi is 5% taxed but chocolate burfi is
fixed with 28%. Plain burfi mixed with other dry frits is of 12%.
This taxing system makes the sweet makers to get confused on
how much GST to be fixed for which product.
• Dr G Gabriel Prabhu:
GST is here, and businesses are still trying to understand the
changes required in their current systems to accommodate the
new compliance model. On this note, we bring you our impact
analysis on something which is very near and dear to us; or, rather
to our stomachs- the restaurant and food industry. Here we will
try to explain how the restaurant bill will look under GST and what
are its implications for the end consumers the owners and the
overall industry.
• Jonathan and et. AI (2017):
“Impact of GST in hotel and restaurants”. The objective of the
study is to how the restaurant bill will look under GST, and what
are the implications for the end consumers for the owner and the
overall industry. The findings revealed that hotels are liable for
GST of 28% (14%CGST+14%SGST) as against the effective tax of
21% under present indirect tax regime.

• Alka shah (2nd Nov 2017)

“Integrated Goods and services tax an Indian innovation”. The
objective of the study is to cross utilisation of credit is to be done
and adjustments to be made between centre and states. The
paper mainly focuses on the key provisions for determining place
of supply of goods/services and nature of supply i.e. interstate or
intrastate.
DATA COLLECTION METHOD
Data is one of the vital aspects of any research methodology.
Every research is based on the data which is analysed and
interpreted to get information. There are two sources of data.
Primary data collection applies surveys, questionnaires,
experiments or direct observations, secondary data collection may
be conducted by collecting information from a diverse source of
documents or electronically stored information.

PRIMARY DATA
Primary data are the data which are accumulated from the field
under the control and superintendence of an investigator. It
means original data that have been collected specially for the
purpose in the mind. This type of data is generally a fresh and
collected for the first time. It is useful for current studies as well as
for further studies. The collection data tool that has been chosen
in the study is questionnaire as their data collection tool in their
survey.

SECONDARY DATA
Secondary data are the data that have been already collected by
and really available from the other sources. Such data are cheaper
and more quickly obtainable than the primary data and also may
be available when primary data can not be obtained at all.
Basically, secondary data provide the research to understand
more about the topic and give clear view and prespective to our
current study. The data collected through various sources such as
internet i.e. google.com, newspapers and also GST books which
refers by Chartered Accountants CA.
 DATA ANALYSIS
INTERPRETATION AND PRESENTATION
Organization: Hotels in Mumbai

1. Is this your first Business related to Restaurant sector?

(a) Yes
(b) No

0%
20%

Yes
No

80%

Interpretation:
80% of the Owner had the first business related to hotel sector and rest other 20% had other
industry.

3. Are you satisfied with GST applying in your hotel ?

(a) Yes
(b) No
(c) May be

10% 0%

15%
Yes

No

75%

Interpretation:
75% of the owner’s satisfied with GST applying in their organization, rest 15% are not
satisfied with GST and remaining 10% said that may be they were satisfied.

4. How would you rate your overall experience about GST application in your
Restaurant?
(a) Highly satisfactory
(b) Satisfactory
(c) Neutral
(d) Unsatisfactory
 5%
20%
15%

Highly Satisfactory
Satisfactory
Neutral
Unsatisfactory

60%

Interpretation:

20% of the owners are highly satisfied with GST, 60% of the owners are satisfied with GST,
rest 15% are neutrally satisfied with GST and remaining 5% are not satisfied with GST.

5. Have your hotel received benefits after GST application?

(a) Yes
(b) No
(c) May be

0%

20%

Yes
No
May be
50%

30%

Interpretation:
50% of owners said that their restaurant received benefit after applying GST, rest 30% of
restaurant said that their restaurant are not received any benefits and remaining 20% said their
restaurant may be received benefits after applying GST.

9. Has your customers replied positively about GST application?

(a) Yes
(b) No
(c) May be
(d) can’t say

5% 0%
20%

Yes
No
May be
Can't say

75%

Interpretation:
20% of the owners said their customers positively replied on GST application, 75% of
owners said their customers are not positively replied on GST and rest 5% said that may be
their customers replied positively on GST application in their firm.
10. Is application of GST positively influence on your restaurant’s performance in the
market?
(a) Yes
(b) No
(c) May be
(d) Can’t say

5% 0%
5%

Yes
No
May be
Can't say

90%

Interpretation:
90% of the owners said that GST is positively influence on their restaurant’s performance in
the market, rest 5% said GST is not positively influence on their restaurant’s performance
and remaining 5% said may be GST positively influence on their restaurant’s performance.

CONCLUSION
Companies which focuses on Food & Housekeeping could be the
biggest beneficiaries of GST within the hotel sector. This will help the
consumers and also leads to savings. After implementation of GST it
was found that the budget hotels are the most benefitted. The hotels
falling are GST under 18-28% GST slab bears the adverse effects of
GST.
 It includes a uniform tax structure and through this all states have
their own taxes. Before the restaurant industry was burdened with
multiple taxation. Now this duality of tax is removed. It also helps in
improving the financial management. Hopefully, GST will remove the
problems faced by the hotel sector leading to cost optimization and
free flow of transactions.

SUGGESTIONS
1.) Customer-slab rate policy have to take initiative by the
government of India to cut the income level differences among
the low middle-class and low income group.
2.) As the hotels comprising of Non A/c compartments, the hotel
have to fix a moderate rate of GST as it suits the income needs of
low-middle class and low income people
3.) The Allowances on GST rates in small-sized and moderate hotels
as it encourages the low-income and middle-class people.
4.) In point of GST in hotel, especially for the alcoholic products like
liquor should be taxed at the highest slab rate compared to the
current 18% GST rate on A/c restaurants.
5.) Reduce the cost of the food and beverage it encourages the low –
income and middle-class people.
REFERENCES
• www.gst.gov.in
• www.bankbazaar.com
• www.taxreply.com
• http://quickbooks.intuit.com/in/resources/accounting-
taxes/input-tax-credit-under-gst
• http://ictactjournals.in/paper/IJMS_Vol_3_Iss_2_Paper_5_511
_514.pdf
• www.icsi.edu
• www.ijirmf.com