The GST Board accepts the "transaction value" to tax the hotel rate

NEW DELHI: You will no longer be charged a higher tax rate for your stay at the hotel, the Goods and Services Tax Council finally accepting the "transaction value" for the determination of the tax rate.

The hospitality industry has been pushing hard for this change since the launch of the GST last July.

The use of the "stated rate" for the determination of the tax rate meant that customers had to pay higher taxes at a higher rate, even if the rate of billed rooms decreased in the slab. lower. There are three slabs for hotels – 12, 18 and 28%.

The center and the States notified the change by replacing "stated rate" with "value of the supply", which is equivalent to the transaction value.

However, experts are puzzled at the change being limited to room rates and not extended to restaurants inside the hotels.

The hotels face three tariff slabs – the first is 1,000 rupees and 2,500 rupees a day, tariff of 12% with input tax credit; the second is for those who have room rate per day above Rs 2500 but less than Rs 7500 to 18% with input tax credit; the third is for five stars and those with room rates above Rs 7,700 to 28% with input tax credit.

Under the previous regime, we had to pay the GST at the rate of 28% if the declared rate of the room was higher than Rs 7,500 even if he had paid less, because the final room rates are generally less high.

The last change corrected this situation.