Impact of GST on Hoteliers

Registrations

1. Liable to register

a. only if aggregate turnover of a person is >20 Lakhs in a financial year (>10 lakhs in North-eastern states, Uttarakhand, Sikkim)

b. This threshold doesn’t apply to interstate supply i.e. in case supply is made to different states, even for Rs 1 of sales, registration has to be taken.

c. Existing companies having VAT, service tax registration need to migrate to GST

2. Not Liable to Register

a. Doing Pure catering services to an educational institution

3. Composition Scheme: Small restaurants with an aggregate turnover of above Rs. 20 Lakhs but less than Rs. 75 Lakhs, may opt for Composition scheme and pay tax at 5% of Inter-State/Union territory turnover. Conditions for opting Composition scheme are as follows:

a. Registered person is not engaged in the supply of services other than restaurant service (Example: If registered person is providing accommodation services or renting of banquet halls along with restaurant services, then such person cannot be covered under Composition scheme)

b. Composition scheme shall lapse from the day on which his aggregate turnover exceeds Rs. 75 Lakhs.

c. Such person shall not collect any tax from the recipient nor entitled to any Input tax credit.

4. Other Points to Note

a. Compulsory registration is required for supplies made through e-commerce portal who is required to collect tax at source at 1% (not yet notified)

b. Hotels already registered under existing laws need to migrate to GST and hotels whose aggregate turnover exceeds the above threshold need to obtain registration under GST regime.

c. Registration should be taken in each state of operation

d. In case of branches within the state, no need of taking separate registration, however all other branches should be shown as additional place of business

Rates of Tax for Restaurant Service

Sl. No	Particulars	HSN/SAC Code	Rate of Tax
1.	Supply of Food/drinks in restaurant not having: • facility of air -conditioning or central air -heating in any part of the establishment, at any time during the year, and • license or permit to serve alcoholic liquor for human consumption	996331	12%
2.	Supply of Food/drinks in restaurant having facility of air -conditioning or central air-heating in any part of the establishment, at any time during the year	996331	18%
3.	Supply of Food/drinks in restaurant having license or permit to serve alcoholic liquor for human consumption	996331	18%
4.	Supply of Food/drinks (whether or not alcoholic liquor) in outdoor catering	996334	18%

Rate of tax for Accommodation Service

Sl. No	Particulars	Declared Room Tariff [Rs./day/room]	HSN/SAC Code	Rate
1.	Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes (Accommodation services in Hotels)	< 1000	996311	NIL
		1000 – 2500	996311	12%
		2500 – 7500	996311	18%
		> 7500	996311	28%

Input Tax Credit

Input Tax Credit is allowed on all inputs received and used for the furtherance of a business subject to certain restrictions

ITC is not available on the following [Section 17(5) of CGST Act]

i.        Food & Beverages, Outdoor catering etc. except where they are used for making an outward taxable supply of same category of goods or services

ii.       Membership of a club, health and fitness centre

iii.     Rent-a-cab, life insurance, and health insurance except where the government notifies it as obligatory or are used for making an outward taxable supply of same category of goods or services

iv.     Travel benefits extended to employees on vacation such as leave or home travel allowance

v.       Works contract services for construction of immoveable property

vi.     Goods or services or both used for personal consumption

Persons registered under Composition scheme not eligible for any Input Tax Credit

The registered person making purchases from a taxable person who is under composition scheme is not eligible for Composition input tax credit.

Returns

Month	GSTR 3B Simplified returns (Pay tax)
July	20th August
August	20th of September

AND

Month	GSTR 1	GSTR 2	GSTR 3
July	5th September	10th September
August	20th September	25th September
September	10th October	15th October	20th October