GST on Hotels & Tourism — Room 12-18%, Tour 5%, Travel 5-18%

HOTEL WITH MIXED ROOM TARIFFS — GST RATE DETERMINATION: POST-JULY 2022 RULE (47th GST Council): Rate is determined by ACTUAL TRANSACTION VALUE (amount charged per room per day). NOT based on: published tariff, rack rate, or declared tariff. This is a MAJOR simplification from earlier rules. YOUR HOTEL: Standard rooms: typically charged ₹3,000-₹5,000. Deluxe rooms: typically charged ₹6,000-₹8,000. Suite: typically charged ₹10,000-₹12,000. GST RATES: Standard room at ₹3,000: 12% (below ₹7,500 threshold). Deluxe room at ₹6,500: 12% (below ₹7,500). Deluxe room at ₹7,800: 18% (above ₹7,500). Suite at ₹10,000: 18% (above ₹7,500). Same room, different rates on different days: Monday (off-peak): ₹5,000 → 12%. Saturday (peak): ₹8,000 → 18%. OTA discounted booking: Rack rate ₹9,000 → OTA price ₹6,800 → 12% (actual charge matters). PRACTICAL SCENARIOS: (1) Corporate rate agreement: Company books at ₹6,000/night (negotiated rate). Rack rate of room: ₹9,000. GST: 12% (based on ₹6,000 actual charge — not ₹9,000 rack rate). (2) Package deal (3 nights for ₹20,000): Per night: ₹20,000 ÷ 3 = ₹6,667. GST: 12% per night (each night below ₹7,500). (3) Room + breakfast bundled at ₹8,000: Total package per night: ₹8,000. GST: 18% (total consideration > ₹7,500 — breakfast included in room tariff). TO GET 12% RATE: Split billing: Room: ₹7,000 (12% GST). Breakfast: ₹1,000 (5% GST — restaurant service). Total: ₹8,000. Client pays less GST overall. IMPORTANT: If you split, breakfast must be genuinely OPTIONAL (not compulsory). If breakfast is mandatory/complimentary: it's part of room tariff (can't split). COMPLIMENTARY UPGRADES: Guest booked standard at ₹5,000 → upgraded to suite (normally ₹12,000): GST: 12% (based on ₹5,000 — actual amount CHARGED to guest). Upgrade is complimentary — no additional consideration. What matters: what the guest PAYS, not room's normal rate. DYNAMIC PRICING SYSTEMS: Revenue management software changes rates daily: Each booking: assess GST rate at time of CHECK-IN (or booking confirmation). If rate changes between booking and check-in: Rate at actual charge (final invoice amount) determines GST slab. Pre-payment at ₹7,000 (12%) → final bill ₹8,000 (upgraded): Issue supplementary invoice for differential at 18%? Or: re-invoice entire stay at 18%? Practical: Use final checkout bill amount for GST determination. MULTIPLE ROOMS (Group booking): Company books 20 rooms: 15 rooms at ₹6,000 each → 12%. 5 rooms at ₹9,000 each → 18%. Each room assessed INDIVIDUALLY (not averaged). No: total ÷ 20 rooms approach. Each invoice line: room number + rate + applicable GST.

OUTBOUND INTERNATIONAL TOUR — GST TREATMENT: TOUR OPERATOR RATE: International tour package: 5% WITHOUT ITC. Same rate as domestic — no distinction for international. Applied on: TOTAL package value (what Indian tourist pays to tour operator). Includes: flights, hotel abroad, transfers, sightseeing, guide — everything in package. WHAT IS TAXABLE? The tour operator's SERVICE of arranging the tour = taxable in India. Even though services are consumed ABROAD: it's not export (recipient is in India). Place of supply: India (where recipient — Indian tourist — is located). So: Indian tour operator → Indian tourist → tour abroad: Indian GST applies (5%). VALUATION — WHAT'S THE TAXABLE VALUE? OPTION 1 (Default — Rule 32(5)): Total consideration charged to tourist. Include: everything in the package price. Do NOT deduct: hotel cost, flight cost, etc. 5% on FULL amount. Example: Package: ₹2,00,000 (Europe 7-day tour — includes flights, hotels, sightseeing). GST: 5% × ₹2,00,000 = ₹10,000. OPTION 2 (Margin scheme — not available for tour operators): Tour operators DO NOT have margin scheme. Unlike EU VAT margin scheme: Indian GST has no special provision. Must charge 5% on full value (not just markup/margin). ITC: NOT available (condition of 5% rate). INTERNATIONAL HOTEL / FLIGHT COST: Tour operator pays hotel abroad (say €500/night): This is IMPORT OF SERVICE by tour operator. RCM applicable? Place of supply for hotel (immovable property): Where property is (abroad). If place of supply is outside India: NOT import (not taxable in India). So: hotel abroad = no RCM for Indian tour operator. Flight (international): If booked from foreign airline directly: No Indian GST (international transport — exempt/zero-rated). If booked through Indian agent: agent's fee: 18% (but 5% if part of tour package). GUIDE / TRANSFER ABROAD: Local guide in Paris: Service consumed outside India. Place of supply: outside India. NOT import of service (no RCM). Tour operator's cost: no GST implication. Only taxable supply: tour operator → Indian tourist: 5% on total package. INBOUND INTERNATIONAL (Foreign tourist in India — Indian tour operator): Foreign tourist (non-resident) + Indian tour operator: If payment in Indian rupees: 5% GST (standard tour operator rate). If payment in CONVERTIBLE FOREIGN EXCHANGE: Debate: Is this EXPORT of service? For export: supplier in India ✓, recipient outside India ✓, payment in forex ✓. But: services are PERFORMED in India (tourist is touring India). Section 13(3)(a): For services in respect of immovable property → place of supply = where property is (India). Section 13(3)(b): For performance-based services → where performed (India). If place of supply = India: NOT export (even with forex payment). BUT: If considered under general rule (Section 13(2)): location of recipient (abroad) = place of supply outside India = EXPORT (0%). THIS IS THE DISPUTE. Many operators claim 0% (export). Department argues: 5% (place of performance = India). SAFE POSITION: Charge 5% and don't claim export benefit. Aggressive position: Claim 0% under LUT (be prepared for litigation). FOREX TOUR OPERATOR (Selling international packages): Indian tour operator selling packages to NRIs/foreigners: If ALL of: recipient outside India + payment in forex + service arrangement (not performance): EXPORT (0% under LUT). This works for: selling tour from India to NRI (NRI pays from abroad, tours India). Tour operator arranges — arrangement service (not performance): place of supply = recipient location (abroad) = export. PRACTICAL TIP FOR TOUR OPERATORS: Maintain: complete documentation of foreign payments. Separate: domestic vs international tour revenue. International outbound (Indian tourist): 5% on full value. International inbound (foreign tourist): 5% (conservative) or 0% (aggressive — with strong documentation). Domestic tours: 5% on full value.

ONLINE TRAVEL AGGREGATOR (OTA) — GST FRAMEWORK: YOUR ROLE AS OTA: You are a MARKETPLACE/PLATFORM — not the supplier of accommodation/transport. Hotels supply accommodation. Airlines supply transport. You facilitate the transaction (connecting buyer-seller). YOUR GST OBLIGATIONS (Multiple roles): ROLE 1 — E-COMMERCE OPERATOR (TCS): Section 52 — Tax Collected at Source: You MUST collect TCS at 1% (0.5% CGST + 0.5% SGST) on NET VALUE of taxable supplies made through your platform. Net value = Gross booking value minus returns/cancellations. Example: Hotel booking: ₹10,000 (room charge). TCS: 1% × ₹10,000 = ₹100. You deduct ₹100 from hotel's payment. Hotel gets: ₹10,000 - ₹100 = ₹9,900 (+ claims TCS credit). Your TCS liability: ₹100 (deposit to government). Filing: GSTR-8 (monthly TCS return). Deadline: 10th of following month. ROLE 2 — SERVICE PROVIDER (on your commission): You earn commission from hotels/airlines (say 15-20% of booking). Your commission: TAXABLE at 18% GST. Invoice to hotel: ₹10,000 booking × 15% commission = ₹1,500. GST on commission: ₹1,500 × 18% = ₹270. This is YOUR output GST (not TCS — separate). ROLE 3 — CONVENIENCE FEE TO CUSTOMER: Many OTAs charge convenience/service fee to customer: Fee: ₹200 per booking. GST: 18% on ₹200 = ₹36. This goes in YOUR GSTR-1 as B2C supply. WHAT ABOUT THE HOTEL'S GST? Hotel's obligation: Hotel must charge 12% or 18% GST on room tariff. This appears on HOTEL'S invoice (not yours). You may collect on behalf of hotel (as facilitator). Hotel files this in HOTEL'S GSTR-1. You show in GSTR-8 (TCS return) — reporting only. YOU DON'T PAY THE HOTEL'S GST — you just facilitate collection. FLIGHT BOOKINGS: Airlines charge 5%/12% GST on tickets. Your role: pure intermediary (selling on behalf). Your income: commission from airline + convenience fee from customer. Commission: 18% GST (your supply to airline). Convenience fee: 18% GST (your supply to passenger). Airline's GST: airline's responsibility (5% or 12%). TCS: 1% on ticket value (collected from airline's payment). ACCOMMODATION AGGREGATOR — SPECIAL PROVISION: W.e.f. October 2023 — Section 9(5) CGST Act: If hotel/accommodation is UNREGISTERED (no GSTIN): OTA MUST pay GST on behalf of hotel (deemed supplier). OTA becomes: deemed supplier of accommodation service. Rate: 12% (since room value doesn't affect OTA's deemed supply rate — it's the standard 12%). This impacts: small hotels, B&Bs, homestays that are unregistered. They list on OTA → OTA collects + pays their GST. If hotel IS registered: No Section 9(5) — hotel pays own GST. OTA: only TCS + own commission GST. ITC FOR OTA: Available on: Technology/IT costs: 18% → ITC ✓. Marketing/advertising: 18% → ITC ✓. Office rent: 18% → ITC ✓. Employee costs: No GST (salary). Cloud hosting (AWS/GCP): 18% → ITC ✓ (RCM if from abroad). Payment gateway charges: 18% → ITC ✓. Legal/professional: 18% → ITC ✓. TCS is NOT your expense: It's collected from supplier (hotel) and deposited. No ITC question on TCS. COMPLIANCE BURDEN: Monthly: GSTR-1 (outward — commission, fees). GSTR-3B (summary — pay net tax). GSTR-8 (TCS — if e-commerce operator). Annually: GSTR-9 (annual return). GSTR-9C (audit — if > ₹5 crore). Reconciliation: TCS credit matching with suppliers. MULTI-STATE: If operating across India (national platform): Single registration in home state is sufficient for online services. But: if physical offices in multiple states → registration per state. TCS: single GSTIN is fine (no per-state TCS requirement).

HOTEL — CANCELLATION, NO-SHOW & ADVANCE GST: CANCELLATION CHARGES: Guest cancels booking → hotel charges cancellation fee (e.g., one night's rate): THIS IS TAXABLE at 18% GST. Why? 'Agreeing to tolerate an act' = supply of service (Schedule II, Clause 5(e)). Cancellation fee = hotel tolerating cancellation = service. Rate: 18% (not the accommodation rate of 12%). SAC: 999794 (agreeing to tolerate an act). Example: Room rate: ₹5,000. Cancellation fee: ₹5,000 (one night penalty). GST on cancellation: 18% × ₹5,000 = ₹900. NOT 12% (which would be accommodation rate). CLARIFICATION: W.e.f. October 2024 amendment: 'Agreeing to tolerate an act for consideration' = explicitly taxable. Earlier: some argued cancellation charges are not 'supply'. Now: clearly taxable at 18%. NO-SHOW CHARGES: Guest doesn't show up (guaranteed booking — credit card hold): Same treatment as cancellation: 18% GST. Hotel charges one night (or as per policy): 18%. Invoice must be issued to the guest (even if they didn't check in). For corporate no-shows: Company gets 18% invoice → can claim ITC. ADVANCE BOOKING (Prepayment): Guest pays advance (full/partial) at time of booking: TIME OF SUPPLY: Advance payment received → GST liable at that point (Section 13(2)(a)). Even before check-in: receipt of advance = time of supply. Invoice must be issued within 30 days of advance receipt. Rate determination at advance stage: Based on expected room tariff: If booked at ₹6,000: 12%. If booked at ₹9,000: 18%. ADVANCE + RATE CHANGE: Booked at ₹6,000 (12%) → upgraded at check-in to ₹9,000 (18%): Issue supplementary/debit note for differential GST. Original: 12% on ₹6,000 = ₹720. Final: 18% on ₹9,000 = ₹1,620. Supplementary: ₹1,620 - ₹720 = ₹900 additional GST. ADVANCE FORFEITURE: Guest pays ₹10,000 advance → cancels → hotel forfeits advance: Forfeited advance: 18% GST (same as cancellation charge). Original advance receipt: already had time of supply (advance). If original 12% was charged: Issue credit note for 12% (accommodation not provided). Issue fresh invoice at 18% (cancellation/forfeiture). Net: 18% on forfeited amount. REFUND OF ADVANCE (Full cancellation with refund): Hotel refunds 100% advance (free cancellation policy): Issue credit note against original tax invoice. Reverse the GST charged on advance. No cancellation fee: no GST. Partial refund: Refunded portion: credit note (reverse GST). Retained portion (cancellation fee): 18% GST. CREDIT NOTES: When to issue: Full/partial refund of advance. Rate correction (12% → 18% or vice versa). Overbilling correction. Discount given after invoice. Time limit: Credit note must be issued before: September 30 of following financial year (Section 34). Or: date of filing annual return (whichever is earlier). Cannot issue credit note after this deadline. GROUP BOOKINGS (Corporate): Block booking (50 rooms): Advance: Based on agreed rate per room per night. Some rooms used, some not: Used rooms: 12/18% (accommodation). Unused rooms (attrition — company pays penalty): 18% (cancellation/no-show). Corporate usually accepts this (they claim ITC on 18% anyway). GIFT VOUCHERS / HOTEL VOUCHERS: Hotel sells gift voucher (₹10,000 — can be used for room/restaurant): Time of supply: When voucher is REDEEMED (not when sold). Section 12(4): Voucher is neither supply of goods nor services at time of issue. When redeemed: room → 12/18%. Restaurant → 5%. Spa → 18%. Rate depends on HOW it's used. If voucher expires unused: No supply occurred — no GST. But: if amount is forfeited by hotel: Taxable? Debatable. Conservative: 18% (forfeiture = tolerance). Aggressive: Not taxable (no supply). LOYALTY POINTS / REWARDS: Guest earns loyalty points (Marriott Bonvoy, IHG, Taj InnerCircle): Points earned: NOT taxable (no consideration flows). Points redeemed (free night): No GST to guest (no consideration from guest). But: hotel's cost (providing free room): No ITC reversal required (promotional expense). Points converted to goods/services with cash payment: GST on the cash payment portion.