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“ Hotel Industry under New Tax Regime ”

 

Gist of provisions related to services provided and received by hotel and catering industry.

 

1.    Mandap Keeper

Till 30-06-2012

 

  • Services without supply of food : Effective Rate 12.36%
     
  • Services provided “with supply of food”
    • Taxable-60%, Effective Rate 7.416%
       
    • No Cenvat allowed
       
    • Invoice indicates that catering is also provided
       

W.e.f. 01-07-2012

 

  • Services without catering : Effective Rate 14.00%
     
  • Services provided with catering

 

Bundled Service of Supply of food/ drink + Renting of Premises[including hotel, convention center, club, pandal, shamiana or any place specially arranged for organizing a function]

  • 70% taxable, Effective Rate 9.80%
     
  • Value  = Amount charged (+) FOC Material supplied by recipient (-)VAT
     
  • Cenvat disallowed only on goods excluding Chapter 1-22 of CETA

 

2.    Restaurant

 

Till 30-06-2012

    

Exempted - Serving of food and beverage by a restaurant

  • Non- air conditioned in any part of the establishment during any part of the year or
     
  • Does not have a license to serve alcoholic beverages

 

Taxable: In case of air-conditioned restaurant with a license to serve alcoholic beverage, 30%,  Effective Rate 3.708%

 

W.e.f. 01-07-2012

   

Exempted -Serving of food and beverage by:

  • A restaurant, eating joint or mess,
     
  • Non- air conditioned /non centrally heated in any part of the establishment during any part of the year and
     
  • Does not have a license to serve alcoholic beverages

 

Taxable -  Supply portion of food/ article for human consumption is treated as “deemed sale”- 40%, Effective Rate 5.60%

  • Value  = Amount charged (+) FOC Material supplied by recipient (-)VAT

  • Cenvat disallowed only on goods excluding Chapter 1-22 of CETA

 

3.    Room Rent

Till 30-06-2012

 

  • Services provided by hotel, inn, guest house, club or campsite for providing accommodation for < 3 months
     
  • Taxable – 50%, Effective Rate 6.18%
     
  • No Cenvat allowed

W.e.f. 01-07-2012

 

Taxable -Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes 60%, Effective Rate 8.40%

  • No cenvat credit of capital goods and Inputs allowed
     
  • Cenvat credit of input services permissible

 

Exempted - Renting of commercial places like hotel etc. for lodging purposes having declared tariff upto <1000/ day.

 

Complimentary breakfast: Bundling of complimentary breakfast is normal with the room, hence supply of breakfast and room tariff are not segregated for charging.

 

4.    Outdoor Catering

 

Till 30-06-2012

 

  • Services without supply of food: Effective Rate 12.36%
     
  • Services provided “with supply of food”

 

  • 50% taxable abatement, Effective Rate 6.18%
     
  • No Cenvat allowed
     
  • Invoice indicates that catering is also provided

 

W.e.f. 01-07-2012

 

Taxable -  Supply portion of food/ article for human consumption is treated as “deemed sale”- 60%, Effective Rate 8.60%

  • Value  = Amount charged (+) FOC Material supplied by recipient (-)VAT
     
  • Cenvat disallowed only on goods excluding Chapter 1-22 of CETA

 

Exempted: Catering under Mid-day meal scheme sponsored by Government

 

5.    Rent-a-Cab

 

Taxable -  40%, Effective Rate 5.60%

 

  • Cenvat totally disallowed if abatement availed
     
  • Cenvat credit of motor vehicles purchased by service provider allowed as capital goods if no abatement is availed
     
  • Credit of service tax paid of rented vehicle used for providing rent-a-cab service is allowed only of the rented vehicle is “capital goods”
     
  • Reverse Charge: Not applicable to a hotel as it is in the similar line

 

6.    Membership of Clubs

Taxable14%

 

7.    Renting of property

 

  • Exempted-Renting of immovable property by or to any “educational institution”
     
  • Parking Charges to general public [However leasing space to an entity for providing parking facility is taxable]
     
  • Property tax paid to local bodies is deductible from gross amount charged
     
  • No provision for abatement in case of renting of commercial property

 

8.    Laundry

Till 30-06-2012

 

Only dry cleaning service was taxable

 

W.e.f. 01-07-2012

 

All laundry taxable

 

9.    Game Zones

Specified in Negative List; out of purview of tax

 

10.Sponsorship

 

Sponsorship as defined under repealed Sec 65 includes naming an event after the sponsor, displaying the sponsor’s company logo or trading name, giving the sponsor exclusive or priority booking rights, sponsoring prizes or trophies for competition; but does not include any financial or other support in the form of donations or gifts, given by the donors subject to the condition that the service provider is under no obligation to provide anything in return to such donors.

Tax Payable under Reverse Charge @ 14.00%

Person Liable: Body corporate of firm located in India giving sponsorship

 

11.GTA

 

Taxable under “reverse charge” by Factory, Society/ Cooperative Society, Registered Excise Dealer, Body Corporate, Partnership Firm/ AOP – 30% Effective Rate 4.20%.

 

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