who are watching holiday on budget must be ready to cough more for them hotel rooms From July 18, 2022. This is because the Goods and Services Tax (GST) Council has announced that from July 18, even hotels charging less than Rs 1,000 a day will come under its purview. GST Net.

According to a press release issued by GST Council On June 29, 2022, “Hotel accommodation priced up to Rs 1000/day will be taxed at 12%.” (However, the government is yet to issue a notification in this regard.) As of now, GST exemption 1,000 per day was available for hotel rooms.

Poonam Harjani, Leader, Indirect Tax Research & Advisory, Taxman.com says, “Services so far provided by a hotel, inn, guest house, club or campsite for residential or lodging purposes, the value of which is the supply of a unit of accommodation. Value of below or equal to Rs.1000 per day or equivalent is exempted from GST. The GST Council has recommended to withdraw the said exemption and apply 12% GST rate on that. With this rate revision, effectively all hotels have announced a tariff of Rs. 7500 or less will attract GST at the rate of 12 per cent. That said, levying GST on low-cost hotels will make holidays more expensive for the common man.”

After July 18, 2022, the GST applicable on hotel rooms will be as follows:

Source: Taxmann.com

Abhishek Jain, Partner, Indirect Taxes, KPMG India says, “The government wants to roll back the exemption for hotel accommodation priced up to Rs 1000 per day, and thus the said accommodation will be taxable at 12%. This change has been introduced by The government will widen the tax base but increase the cost to the end customers in this segment.”

To explain how much it will affect you. Let’s say you book a hotel room for two nights, which costs Rs 900 per night. Before the announcement of the GST Council, you had to pay a total of Rs 1,800 and no GST was levied on it. However, from July 18, 2022, GST will be levied at the rate of 12%. You have to pay Rs 1800 and Rs 216 as GST. The total amount you will pay as hotel room charges will be Rs.2016.

However, small hoteliers can still get relief from paying GST. “As a relief, even very small-scale hotels will still not come under the purview of GST if their annual revenue is less than the taxable limit of Rs 20 lakh,” says Harjani.