GST UPDATE
Desk of CA. Praveen Sharma Series- 502 GST on Accommodation Services, Cruises/Packages
The Goods and Services Tax (GST) on accommodation services in India is determined based on the tariff of the accommodation provided. The GST rates for accommodation services are structured according to the value of supply. Here are the relevant sections and notifications:
1. Section 9 of the CGST Act, 2017: This section deals with the levy and collection of GST. It specifies that GST is levied on all supplies of goods and services, except on the supply of alcoholic liquor for human consumption, at the rates specified in the schedules to the Act.
2. Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017 and subsequent amendments: This notification, along with its amendments, provides the detailed GST rates for various services, including accommodation services.
The GST rates for accommodation services are as follows:
- Nil Rate: Accommodation services provided by hotels, inns, guest houses, clubs, campsites, or other commercial places meant for residential or lodging purposes, where the charge per unit of accommodation (room, suite, etc.) per day is less than Rs. 1,000.
- 12% Rate: Accommodation services where the charge per unit of accommodation per day is Rs. 1,001 to Rs. 7,500.
- 18% Rate: Accommodation services where the charge per unit of accommodation per day is above Rs. 7,500.
Vide Notification No. 04/2022-CT (Rate) dt. 13.07.2022 the exemption hitherto available in respect of the accommodation services by a hotel, inn, guest house, club or campsite, having the value of supply below or equal to Rs. 1,000/unit/day has been omitted. Hence the said services shall be taxable w.e.f. 18.07.2022
Further, vide Notification No. 03/2022-CT (Rate) dt. 13.07.2022 the aforesaid accommodation services having the value of supply not more than Rs. 7,500/unit/day shall be taxable @ 12%
Additionally, there are some exemptions and special rates under specific conditions, such as for hostels or accommodations provided by charitable organizations, which might be subject to different or nil rates of GST.
It's important to note that the GST rates can be subject to change based on the decisions made in the GST Council meetings. Therefore, it's advisable to refer to the latest notifications and circulars issued by the Central Board of Indirect Taxes and Customs (CBIC) for the most current rates and rules.
GST Rates on Components of Cruise Packages
Transportation Services: The GST rate for transportation services by sea or inland waterways is 5% with ITC (Input Tax Credit) of input services. This would apply to the actual cruise travel component.
Accommodation Services: If the cruise package includes overnight stays in cabins on the cruise ship, the GST rate could vary based on the tariff of the accommodation. The rates are similar to those for accommodation services on land, with 12% for tariffs of Rs. 1,001 to Rs. 7,500 per unit per day and 18% for tariffs above Rs. 7,500 per unit per day.
Food and Beverage Services: Services provided by restaurants, cafes, or similar establishments within the cruise ship typically attract a GST rate of 5% without ITC or 18% with ITC, depending on whether the establishment is air-conditioned or otherwise and other factors.
Entertainment Services: Any entertainment activities provided as part of the cruise package would be subject to GST at the rate applicable to such services, which could be 18%.
Bundled Services
For cruise packages that bundle various services together, the determination of GST rates might follow the rules for composite and mixed supplies as outlined in Section 8 of the CGST Act, 2017. The principle generally applied is that the entire package might be taxed at the rate applicable to the principal supply within the package.
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CA. Praveen Sharma
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