GST on Hotel Rooms: GST can be levied on hotel rooms rented less than Rs.1000
If you book a hotel room for less than Rs.1000 in rent, you can also be required to pay GST. In addition, rooms rented for more than Rs.5000 per day while receiving treatment in a private hospital are subject to GST. These suggestions will be taken into account at the future GST Council meeting, which will take place in Chandigarh on June 28 and 29. The GoM was formed under the leadership of Karnataka Chief Minister and Finance Minister B. Bommai. The GST Council’s Group of Ministers (GoM) has issued a number of recommendations to expand the application of GST to the services industry.
It has also been suggested that services connected to the Insurance Regulatory Authority be included in the scope of GST, along with those offered by the RBI to banks and other financial organisations.
The GoM report will be made available to the public during the council meeting. In order to rationalise the inverted duty structure, the GoM has also suggested modifying the GST rates for a number of goods.
Currently, it is allegedly being exploited to avoid charging GST on hotel rooms hired for less than Rs 1000. 12 percent GST is applied to room rentals between Rs.1001 and Rs.7500. However, the hotel owner frequently avoids paying GST by accepting cash payments from customers by claiming that the room rate is between Rs 2500 and Rs 3000 rather than Rs.1000. The hotel owner is able to conceal his revenue as a result.
Additionally, it has been stated that the four GST slabs—5, 12, 18, and 28—will be changed. However, there is no chance of any modification in the GST rate for items or the GST slab due to the increase in retail inflation. The government would not temporarily alter any item’s GST rates, which could increase inflation. However, decisions can be made regarding the sector-specific recommendations.
States will take up the issue of compensation cess
The state will vehemently bring up the subject of the compensation cess’ continuation at the GST Council meeting as well. To make up for the losses caused by the adoption of the GST, it was decided to levy a cess on the states beginning on July1,2017, for a period of five years. The states may no longer get the compensation cess now that the five-year period will end in July. However, according to the Center, the compensation cess will persist until 2026. In order to cover a deficiency in the states’ remuneration during the Corona period, the Center obtained a loan from the RBI in the states’ names. Now, that obligation will be settled with the cess that will be levied in the name of compensation. As a result, the states won’t receive any direct cess money.
Automobiles and tobacco products are the main subjects of this cess. The cost of several automobiles could have decreased by up to 20% if the cess had not been implemented. because there is a one percent to twenty percent car cess. At that point, MS Money, a partner at Deloitte and a specialist in indirect taxes, claims that the compensation cess was imposed for five years with the intention of ensuring the states’ financial security. The firms impacted by the compensation cess may be concerned if it is extended after June 30.