Just about two years ago, India launched the Goods and Services Tax, which taxed hospitality at a very high rate. Then, GST for hotels where the daily price of INR 7,500 (USD 100) was fixed at 18% and when the daily rate went above INR 7,500, the GST would become 28%. Given that countries in the neighbourhood charged anywhere from 6% to 10% mostly, this was weird to look at branded hotels, which mostly get their business from business travellers and a lot of international tourists. A GST Rate Cut on Hotels was long expected, at least by me.
However, this is now going to be corrected from October 1, 2019. As per the new GST rates notified by the Finance Ministry of India, the following will be the new rates of taxes on hotel stays come October 1, 2019:
- Daily Room Tariff beyond INR 7,500 (USD 100) will be charged a GST of 18% instead of 28%
- Daily Room Tariff between INR 1,000 (USD 14) and INR 7,500 (USD 100) will be charged a GST of 12% instead of 18%
- Daily Room Tariff under INR 1,000 (USD 14) won’t be charged any GST just like now.
The GST Rate Cut on Hotels was announced on the evening of Friday, September 20, 2019, and so far, I have not seen the new rates being in displayed on the websites of the hotels. However, I am confident that when you ask for the price to be checked at the hotel itself, you will get the new tax rate, so make sure to check your invoice if it is a postpaid rate.
How the hotels and portals will honour prepaid bookings after October 1, 2019, onwards where the higher GST was collected is not something I am sure of at the moment. If it is a pre-paid booking with the hotel chain itself, they can adjust the excess amount against your incidentals at the hotel or pay it back to you since the money came directly to the hotel. However, how will it work with an OTA is something I don’t know.
Bottom line is if you are making a hotel stay in India after October 1, 2019, make sure to cross-check the taxes with the new official rates to make sure you don’t pay more. Once a hotel invoice is finalised, and you have checked out, you can’t change the rates later.
What do you make of the new lower prices of hotel stays?
hi
i booked my hotel through make my trip and paid on 19th Sept for stay starting from 2nd oct. As per my understanding, i should be charged GST @ 12% since my stay is from 2nd Oct onwards, but MMT is saying i booked on 19th Sept so GST would be @18%.
Pl help in knowing what is right?
I have stayed in Westin Chennai from 21-24th I checked about it as soon as I send the GsT press conference in Goa on 20th, hotel person said rates are not implemented as they have not recieved notification. The problem is in India business not run by eithical manner, for eg if the tax component reduced by 10% the hotel will ensure that rate is increased by 15% and eventually travellers will end up paying higher and hotels make more profit. No one have control as rates are variable. I have sen after GST the segment which expected to lower the price has not transfered the benefits to public.
@Ani, if you would have read the post carefully, and even in the headline, it says the rates will be effective from October 1, 2019. This is a useless crib from your side.
@ Ajay, I think you have not read my comment properly assuming that your 22nd sept blog post is the one & only information for us to know about what’s happening in India? I mentioned clearly “as soon as I have seen the GST press conference ON 20th ” it means, I spoke to the hotel two days before you scribbled this in your blog. Try to be little sensitive towards your readers views, rather than making impulsive comments.
@Ani your comment is not based on any data, but a feeling that rates will not come down. For people like us, who have outstanding bookings for stays beyond October 1, they won’t be able to change rates upwards. And yes, hotel yield management is again a specific discipline inside hotel companies… there are revenue analysts setting prices and changing them as occupancy increases or decreases. GST is passthrough cost to a hotel, I don’t see why they would want to go through with profiteering because the consequences of that are pretty harsh under the GST act. So thanks for the impulsive comments.
As for my scribbles on the blog, I never claimed to be the first. I would rather be the one with the most information available than be the first. People have written about it just now as well, such as OMAAT and LL.
@ Ajay as a blogger it’s not wise for you to Pass “judgement ” on readers. Readers make the comment based on how a person feels and understand about a particular issue for eg GST in hotel rates & your blog is not a professional scientific or academic platform that require rigorous data analysis to make a passing remarks, since you raised the point of data and label me as impulsive, I believe I have the credibility and data in my hand to make a case for hotels rate after GST implementation because I’m staying in 5 star hotels for minimum 20 days in a month for the last 15 years & I approve the travel expense of around 500 employees of my company, I organise yearly 300-400 conferences and involve in 5 national conferences that involves around 7000 delegates, usually conduct in high profile properties like Leela , Taj etc. Its not my impulse which made me to scribble the point but it’s my worry and concern that in India we lack an ethical foundation for doing business because of OF that I doubt GST cut may not pass to the public which has witnessed in many industry including pharmaceutical where I work. By the way I appreciate your efforts and I do learn many things from your blog. Keep up the good work.
@Ani, I am not here to pick a fight with you and show you down. Just to be clear of the intentions, your first post did not have too much element except that you were worried. On the second one, you used the impulsive line for me so I gave it back to you. I have no business passing judgement on people and I appreciate all the patronage we where we dole out so much information and spend hours every day apart from everything else I do, and still dish it out for free. But I always encourage structured thinking and datapoints help. Data not feelings are the cornerstone of being successful in earning and using benefits to your advantage. That’s all. Cheers!
This is fantastic! And do much more traveler friendly!!!