Hotel industry & food industry under gst

HOTEL INDUSTRY & FOOD INDUSTRY UNDER GOODS AND SERVICES TAX

• Goods and Service Tax (GST) is a destination-based consumption tax which is a levy of tax on all goods and services with the objective of expanding the tax base through a wide coverage of economic activities,  reduction of exemptions, mitigating the cascading effect, enable better compliance, etc. thereby resulting into formation of the common national market for goods and services.
• Under GST, all tax invoices raised contain an HSN Code or SAC code for the respective goods or services supplied. Hotels and restaurants would have to use SAC Code.

AVAILABILITY OF INPUT TAX

• The tourism and hospitality industry will find it easier to claim and avail input tax credit (ITC) and will get full ITC on their inputs.
• Before GST, the tax paid on inputs (raw edibles for food, cleaning supplies etc.) could not be adjusted against the output without any complications. However, this will become easier in the GST regime.

GST RATES APPLICABLE ON HOTELS

The GST rate applicable for hotels, inns, guest houses, clubs, campsites or other places for temporary stay would depend on the type of facility, star rating and room rent per day charged.

Tariff per night	Gst rate
Less than INR 1000	NO TAX
MORE THAN INR 1000 BUT LESS THAN INR 2500	12%
MORE THAN INR 2500 BUT LESS THAN INR 7500	18%
MORE THAN INR 7500	28%

Bundled service

18% GST rate is applicable on bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises.

The rate for amusement park

For entertainment events and amusement facilities – a GST rate of 28 % will be applicable.

What will be the rate – In case of the hotel provide a discount on tariff value

• The GST rates applicable on all accommodation establishments (hotels, inns, guest houses, clubs, campsites, or other commercial places meant for residential or lodging purposes) depends on the declared tariff per unit per day by the respective establishment.
• If a discount is provided, then the slab of GST rate applicable (as per the table above) will remain the same, however, the rate would be charged on the actual tariff charged.

Returns required for the Hotel industry

GSTR-1

For turnover up to Rs. 1.5 cr. (file quarterly)

Period                Dates

Jul-Sep          10th January

Oct-Dec          15 February

Jan-Mar         30 April

The last date for filing of Monthly return in FORM GSTR-1 for July-September, for Registered persons having Aggregate turnover of up to 1.5 crore,  has been extended to 10th January, from the earlier due date of 31st December,

For the turnover of more than Rs 1.5 cr. (file monthly)

MONTH                          DATES

July-October    10 January

November         10 January

December         10 February

January            10 March

February          10 April

March               10 May

Last date for filing of Monthly return in FORM GSTR-1 for July-October,  for Registered persons having Aggregate turnover of more than Rs 1.5 crore,  has been extended to 10th January,  from the earlier due date of 31st December.

GSTR-3B

• Filing GSTR-3B is mandatory for hotels and restaurants that fall under the GST regime. If you’ve had no transactions at your property in these two months, you need to file a nil GSTR-3B form.
• GSTR-3B return will have to be filed by all taxpayers in addition to GSTR-1, GSTR-2 and GSTR-3 return. Earlier, GSTR-3B returns were to be filed for the month of July to December 2017.
• IN the 23rd council meeting, it has been announced that GSTR-3B return must be filed for all months from July  to March. The due date for GSTR-3B return will be the 20th of every month.
• Late fees for GSTR-3B of July, Aug. and Sept waived. Any late fees paid for these months will be credited back in the electronic cash ledger under Tax and can be utilized to make GST payments.

Composition scheme

• Restaurants whose turnover is up to Rs. 100 lakhs per year are eligible to be registered under the GST composition scheme,
• Restaurants registered under the GST composition scheme will have to pay GST at the rate of 5% of aggregate turnover

 

No ITC on business promotion expenses and  canteen services incurred

• The Honorable AAR Haryana in M/s. Pvt Musashi Auto Parts. Ltd. held that the ITC is not available for canteen services provided by the employer to its employees and for business promotion expenses.
• It also held that the distribution of food coupons among employees for part-time consideration will indeed attract tax liability and that the coupon value would form part of the total taxable value of the service provider, i.e. the caterer.  { Advance Rule No. HAR/HAAR/R/2019-20/18 of 4 February 2020}

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