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Complete Guide to GST in Hotels & Restaurants - Key Details & Regulations

Explore the comprehensive overview of Goods and Services Tax (GST) laws for the hotel and restaurant sector. Learn about tax rates, input tax credits, returns filing, and reverse tax liabilities in a concise format.

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Complete Guide to GST in Hotels & Restaurants - Key Details & Regulations

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  1. Simplified • Goods & Services Tax (GST) for • HOTELS & RESTAURANTS CA RITUL PATWA www.ritulpatwa.com

  2. INDEX 1) What is GST? 2) Taxes Subsumed under GST 3) Rate of Tax under GST 4) Reverse Tax liability under GST 5) Type of Returns to be Filled under GST 6) How to claim Input Tax Credit under GST 7) Action Points for smooth Migration to GST www.ritulpatwa.com

  3. What is GST? “One Nation – One Tax” GST is a Single Uniform Tax that has subsumed all other Indirect Taxes applicable on Hotels & Restaurants. Taxes subsumed under GST:- > Service Tax > VAT > Luxury Tax > Entry Tax > Entertainment Tax > Central Excise etc. www.ritulpatwa.com

  4. RATE OF GST ON ROOM SALE a) Declared Room Tariff upto Rs. 999/- : NIL b) Room Tariff from Rs. 1000/- to Rs. 2499/- : 12% c) Room Tariff from Rs. 2500/- to Rs. 4999/- : 18% : 28% d) Room Rent is Rs. 5000/- or more : 28% e) 5 Star & above rated Hotels www.ritulpatwa.com

  5. CLARIFICATION ON TERMINOLOGY Declared Room Tariff – It is the Rack Rate or Published Rate of the Rooms; Room Rent – It is the actual Room Rent charged from the Guest; Room Tariff – This is a disputable issue and we expect a clarification from the GST Council on this issue. www.ritulpatwa.com

  6. RATE OF GST ON SUPPLY OF FOOD / DRINKS a) Restaurant not having (i) A.C. or (ii) Central Heating or (iii) License to Serve Liquor : 12% b) Restaurant having License to Serve Liquor : 18% c) Restaurant having (i) A.C. or (ii) Central Heating : 18% d) 5 Star and above rated Hotels with Air Conditioning in the Restaurant : 28% www.ritulpatwa.com

  7. RATE OF GST ON M.O.D. SALES a) Supply of Foods / Drinks in Outdoor Catering : 18% b) Bundled Service – F&B + Premises : 18% c) Renting of Motorcab [No ITC Credit] : 5% d) Tour Operator Service [No ITC Credit] : 5% e) Admission to Entertainment Events : 28% f) All Services not Specified elsewhere like Spa, Laundry etc : 18% www.ritulpatwa.com

  8. REVERSE TAX LIABILITY UNDER GST a) Services received from person located in Non Taxable Territory : 18% b) Services received from a Goods Transport Agency for transport of goods by road : 5% c) Legal Services from an Advocate or firm of Advocates : 18% d) Services from Government or Local Authority : 18% Note : Only select services have been mentioned out of total 18 Services covered under Reverse Charge. www.ritulpatwa.com

  9. REVERSE GST ON URD PURCHASES -:Section 9 (4) of the RGST & CGST Act, 2017:- The ‘state/ central’ tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. --- This implies that in case if you buy any taxable Goods or Services from any person who is an unregistered dealer, then the recipient is liable to pay GST on such Goods/ Services on reverse charge basis. www.ritulpatwa.com

  10. 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. Requirement for claiming Input Tax Credit under GST:- a) Taxpayer must have valid Tax Invoice (of purchase) or debit note; b) Goods/ Services must have been received; c) The supplier has deposited/ paid the Tax charged on Purchases; d) Supplier has filed GST Returns Note : Input Tax credit cannot be claimed on Purchase Invoices which are more than 1 year old www.ritulpatwa.com

  11. RETURNS TO BE FILED UNDER GST GSTR 1 : Outward Supplies made by the taxpayer : 10th of Next Mth : 15th of Next Mth GSTR 2 : Inward Supplies/ purchases received : 20th of Next Mth GSTR 3 : Monthly Return : 31st Dec Next Yr GSTR 9 : Annual Return Note - GSTR 4, 5, 6, 7, 8, 10 & 11 have not been discussed, as they may not apply to the Hotels & Restaurants. www.ritulpatwa.com

  12. CRITICAL TRIGGERS EVENTS OF BLACKLISTING i) Continuous Default for 3 Months in paying ITC that has been reversed; ii) Continuous Default for 3 months or any 3 months-period over a duration of 12 months in uploading the sales details leading to reversal of ITC for others; iii) Continuous short reporting of sales beyond 5% (of total sales) for a period of 6 months. RESULT OF BLACKLISTING i) Name published in public domain; ii) SMS sent to all dealers who have pre-registered this dealer as their supplier; iii) Blacklisted GSTIN cannot be uploaded in purchase details resulting in denial of ITC; [RESULT : If you are blacklisted, your buyers may not buy from you] www.ritulpatwa.com

  13. ACTION POINTS FOR SMOOTH ADOPTION OF GST • Migrate to GST by enrolment on the GST Portal; • Communicate your GSTIN to all your Vendors, & Suppliers; • Collect the GSTIN Number of all your B2B Customers; • Ensure that your returns upto date are filled and Input Credit in the erstwhile laws have been duly reflected in the returns; • Gear-Up your I. T. System & train your accounts team for GST requirements. www.ritulpatwa.com

  14. “The best way to adopt GST is to imbibe right technology and proper training for your TEAM!!” DISCLAIMER: The Views expressed in this presentation are strictly personal and for knowledge of our clients only. The contents of this article are solely for informational purpose and it does not constitute any professional advice or recommendation. The laws related to GST are under evolution and subject to constant changes and amendments over time. It is suggested to take specific legal advice and necessary due diligence before relying on the contents and information of this article. The authors of this article, does not accept any liabilities for any loss or damage of any kind arising out of information on this article and for any actions taken in reliance thereon. CA RITUL PATWA www.ritulpatwa.com

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