GST on Hospitality & Hotels — Rooms 12/18%, Restaurants 5%, Events 18%

Hotel bills are split into components: (1) ROOM CHARGES: 12% or 18% based on declared tariff (not actual billed rate). If declared tariff is ₹8,000 but billed at ₹6,000 after discount — still 18%. (2) RESTAURANT (room service/in-hotel dining): If hotel's declared room tariff >₹7,500 → restaurant charges 18%. If ≤₹7,500 → restaurant can charge 5% (separate billing option). (3) LAUNDRY: If charged as part of room package — same rate as room (12/18%). If separately billed: 18% (cleaning service). (4) SPA/SALON: 18% GST (beauty/wellness service). (5) MINIBAR: 18% (retail sale inside hotel — linked to room tariff category). (6) WIFI/BUSINESS CENTRE: included in room — same rate. Separately: 18%. (7) PARKING: if bundled with room — same rate. Separate: 18%. Best practice: hotels issue ONE invoice with different SAC codes and rates per line item. Total GST varies by component.

Policy rationale: Standalone restaurants (5% without ITC): Government's view — restaurants were not passing ITC benefit to consumers (pre-GST, restaurants charged 14.5% VAT + 6% service tax but didn't reduce menu prices proportionally). Solution: flat 5% without ITC — simpler, lower headline rate, no ITC complications. Hotel restaurants (tariff >₹7,500) at 18% with ITC: These are premium establishments with significant capital expenditure (kitchen equipment, interiors, AC, crockery). They NEED ITC to recover investment. Also: hotel restaurant is composite with accommodation (guest doesn't choose restaurant separately). The anomaly: a restaurant paying ₹7,400 room tariff hotel charges 5%. Same quality restaurant in ₹7,600 tariff hotel charges 18%. This creates pricing distortion — some hotels deliberately keep declared tariff at ₹7,499 to offer 5% restaurant.

Since January 1, 2022: e-commerce operators (Zomato, Swiggy) are DEEMED SUPPLIERS for restaurant food delivery. They collect and deposit 5% GST directly. Flow: (1) Customer orders ₹500 meal on Swiggy. (2) GST on food: 5% = ₹25 (collected by Swiggy, deposited to government). (3) Delivery charges: 18% GST on delivery fee (separate service by platform). (4) Platform commission from restaurant: 18% GST (restaurant pays to Swiggy on commission). (5) Restaurant gets ₹500 minus commission. The restaurant still files GST return showing output through e-commerce. Impact on small restaurants: even those below ₹20 lakh threshold must register if selling through Swiggy/Zomato (e-commerce operator rule). Composition scheme restaurants CANNOT sell through Swiggy/Zomato. This was controversial — small vendors forced to register, maintain compliance, file returns just to list on food apps.

Wedding is NOT a single supply — each service is taxed separately: (1) Marriage hall/mandap rental: 18% GST. (2) Catering at wedding: 5% (outdoor catering — no ITC). (3) Decoration (flowers): 5% if pure flower supply. If event decoration service: 18%. (4) Photography/videography: 18%. (5) DJ/music/entertainment: 18%. (6) Wedding planner/coordinator: 18%. (7) Invitation cards (printed): 12%. (8) Priest/pandit services: exempt (religious). (9) Mehendi artist: 18% (beauty service) — but most are unregistered. (10) Fireworks: 28%. If BUNDLED as single package by wedding planner: treated as mixed supply — HIGHEST rate (18%) applies on entire package. To save GST: get separate bills from each vendor instead of one consolidated wedding package. Total GST on typical ₹25 lakh wedding: approximately ₹2-3 lakh (8-12% effective). Budget weddings with hall + caterer (separate): ₹50K hall at 18% + ₹3L food at 5% = ₹9K + ₹15K = ₹24K GST.