Coming as a big blow to budget travellers (and travellers in general), starting today, all hotel rooms – even those priced below Rs 1,000 – will come under the GST bracket.
If you’ve been saving for your backpacking sojourn for a while now, here’s some news for you that you might not like. You will now have to add some more funds to the savings, as hotel rooms are set to get costlier, starting July 18. According to a recent release by the Goods and Services Tax (GST) Council, rooms priced below Rs 1,000 will now be charged a GST of 12 per cent.
All hotel rooms come under GST bracket – how will this affect you?
Earlier, hotel rooms below Rs 1,000 were exempt from tax, while those above this price point and below Rs 7,500 were charged at 12 per cent GST. Further, hotel rooms above Rs 7,500 were put under the 18 per cent GST bracket. The new update, which the GST Council came to after a two-day meeting, puts all rooms upto Rs 7,500 under the 12 per cent bracket.
Speaking to Economic Times, Poonam Harjani, Leader, Indirect Tax Research and Advisory, Taxmann.com said, “So far, services by a hotel, inn, guest house, club or campsite for residential or lodging purposes, having value of supply of a unit of accommodation below or equal to Rs 1,000 per day or equivalent, has been exempt from GST. The GST Council has recommended to withdraw the said exemption and apply 12 per cent GST rate thereon. With this rate amendment, effectively all hotels having declared tariff of Rs 7,500 or below will be liable to GST at the rate of 12 per cent. That said, levy of GST on low-cost hotels will make the holidaying more expensive for common man (sic).”
This effectively means that in case you booked a hotel room for Rs 1,000, you’ll now have to shell out Rs 1,120 for the same – which you may have earlier kept for daily expenses and more. Some other goods and sercives, including packaged items such as lassi and curd, are also set to fall under the GST bracket now.
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