Booked ho­tel room? Ex­pect 10% GST re­fund if it costs over 7.5k

The Times of India (New Delhi edition) - - Times Business - Reeba.Zachariah @times­group.com Old GST

Mum­bai: Guests of lux­ury ho­tels are likely to gain from the re­cent gov­ern­ment de­ci­sion to slash goods and ser­vices tax (GST) on rooms priced at over Rs 7,500 to 18% from 28% now, and be­low that tar­iff to 12% from 18%. The new rates will be ef­fec­tive from Oc­to­ber 1.

So, if a per­son books a stay in a lux­ury ho­tel with an av­er­age room rate of Rs 10,505, he will save Rs 1,050, or around 8%, un­der the new GST rate as he has to shell out a to­tal of Rs 12,395 against Rs 13,446 un­der the ex­ist­ing tax regime.

The new rate will also be ap­pli­ca­ble to those who have al­ready paid for book­ings after Oc­to­ber 1. Typ­i­cally, hol­i­day­mak­ers book ho­tel rooms in ad­vance as tar­iffs are known to rocket dur­ing pe

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One such va­ca­tioner, John Paul (name changed), has booked three rooms for a five-night stay in De­cem­ber at a lux­u­ri­ous Goa prop­erty. He shelled out Rs 2.6 lakh per room for five nights that in­cluded a 28% GST of Rs 57,540. Days after his book­ing, the gov­ern­ment slas­files stored on don’t have to You can Tonido’s PC on

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fold­ers. hed the GST and the 10-per­cent­age-point re­duc­tion made a dif­fer­ence of Rs 20,550 per room to Paul’s bill. The sav­ing is equiv­a­lent to the price of a brand new Len­ovo lap­top.

Paul con­tacted the fives­tar chain for re­im­burse­ment of the bal­ance GST amount and the ho­tel in an email said, “The dif­fer­ence of tax ex­cess pay­ments re­ceived will be used against ex­tras con­sumed at the ho­tel.”

“If a customer has made part pay­ment while book­ing a room, then the ad­just­ment will be done by the ho­tel at the time of fi­nal billing in­cor­po­rat­ing the re­vised GST rate. In case of full pay­ment done by a customer in ad­vance, the ho­tel will have to re­fund the bal­ance amount to the customer. GST will be paid as ap­pli­ca­ble at the time of bill and not at the time of ad­vance re­ceived,” said Pradeep Shetty, vi­cepres­i­dent of Ho­tel & Restau­rant As­so­ci­a­tion of Western In­dia (HRAWI).

Lux­ury ho­tels, which are twice as ex­pen­sive to de­velop but com­mand a pre­mium pric­ing, ac­count for 11% of the over­all sup­ply of 2.8 lakh rooms in In­dia. The GST rate re­duc­tion is likely to lead to customer sav­ings of 5-8% on ex­ist­ing room rates across ho­tel seg­ments, with lux­ury prop­er­ties ben­e­fit­ing more, a re­cent Ko­tak In­sti­tu­tional Equities re­port said.

Be­sides rooms priced at over Rs 7,500, the gov­ern­ment has also cut GST on room tar­iffs be­tween Rs 1,000 and Rs 7,500 from 18% to 12%. In­ter­est­ingly, de­spite low­er­ing the GST on rooms priced at more than Rs 7,500, in­dus­try ex­ec­u­tives said ho­tels in In­dia con­tinue to be the most taxed in the world.

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