If you are planning a low-cost vacation, here’s some news that might not go down well with you. Starting July 18, 2022, tourists will have to spend a little extra on their hotel bookings. The Goods and Services Tax (GST) Council has recently revealed that from July 18, hotels charging less than Hotel Accommodation below Rs 1,000 per day will be taxed at 12%. The rate changes recommended by the 47th GSTCouncil will be made effective from 18th July 2022. Read on to know more about the latest decision of the GST Council on Hotel Bookings.
This Reform On Hotel Booking Is Implemented To Broaden The Tax Base
The GST council has shocked the travel industry by imposing a 12 percent tax on hotel accommodations below Rs 1,000 per day. Until now, hotel bookings up to Rs 1,000 per day have been free from GST. But the 47th GST Council meeting held in Chandigarh has suggested that the exemption should be replaced with a 12% GST rate. The Council believes that with this rate change, all hotels with reported tariffs of Rs. 7500 or less would be subject to GST at the rate of 12%.
“The government intends to repeal the exemption for hotel accommodations valued up to Rs. 1000 per day, making such accommodations taxed at 12%. The government implemented this reform to broaden the tax base, but it would increase the cost of end customers in this area,” reveals Abhishek Jain, Partner, Indirect Tax, KPMG India.
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Travel Agents Association of India Expresses Displeasure On The Decision Of GST Council
Travel Agents Association of India is seen expressing displeasure on the GST decision on Hotel Bookings in a letter addressed to the Union Finance Minister Nirmala Sitharaman.
“We were looking at the government to do away with taxes and extend support to our industry which is yet to revive from the long crises. However, with the increase, travel trade and hospitality will have to face the brunt majorly. Imposing 12% GST on hotels priced below INR 1000 is the biggest jolt to both the travel and hospitality industry. Hospitality offered below INR 1000 drives the system and an increase at that level will take employment and business opportunities from many,” reveals Jyoti Mayal, President, Travel Agents Association of India.
Also read: Now Pay More For Pizza Toppings As It Faces Higher GST
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