Govt offers clarification on GST rates for accommodation at five-star hotels

 BT Online   New Delhi     Last Updated: July 18, 2017  | 16:32 IST
Govt offers clarification on GST rates for accommodation at five-star hotels

Hotel rooms with tariffs less than Rs 7500 per unit per day will attract a modest rate of 18 per cent GST, the government clarified today. The Ministry of Finance's clarification came on the back of news reports that suggested that five-star hotels would be taxed at the highest slab rate of 28 per cent under GST.

Ministry of Finance, in a tweet, said: "Govt clarifies: Accommodation in any hotel, including 5-star hotels, with tariff of less than Rs.7500 per unit per day, will attract GST @ 18%." Star rating of hotels is, therefore, irrelevant for determining the applicable rate of GST, it said in another tweet.


The tax rate for air-conditioned restaurants, including restaurants in five-star hotels will have GST at 18 per cent, effective from July 1, 2017.


The GST Council had earlier decided different tax rates depending on the type of hotels. The GST on hotels and lodges which charge between Rs 1,000 and Rs 2,500 was fixed at 12 per cent. While, the GST on hotel rooms in the price range of Rs 2,500 - Rs 5,000 was 18 per cent. However, later the rates were revised and 18 per cent GST was decided for the price range of Rs 2,500 - Rs 7,500.  After the revision, the highest tax rate of 28 per cent was assigned to tariffs of Rs 7,500 and above.

The government revised the earlier rates because it realized that the rates could end of hurting tourism business. Hotels and Restaurants Associations also protested against the 28 per cent GST and said: "The high incidences of taxes will make India uncompetitive when it comes to tourism as international tourists will skip the country as a destination."

Vice President of Federation of Hotels and Restaurants Associations of India, Garish Oberoi said, "The initial reaction is of great despair...28 per cent would be the end of the industry."