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Hotels relieved: 28% GST on tariff of Rs 7,500 and above,18% tax on 5-star restaurants

GST on restaurants in five-star and luxury hotels has been reduced from 28% to 18%

Ajay Modi  |  New Delhi 

(From right) Union Finance Minister Arun Jaitley with Puducherry Chief Minister  V Narayanasamy and Revenue Secretary Hasmukh Adhia at the17th GST Council meet at Vigyan Bhavan in New Delhi on Sunday	 Photo: pti
(From right) Union Finance Minister Arun Jaitley with Puducherry Chief Minister V Narayanasamy and Revenue Secretary Hasmukh Adhia at the17th GST Council meet at Vigyan Bhavan in New Delhi on Sunday Photo: pti

Branded mid-market and luxury hotels have a reason to cheer because the Council on Sunday relaxed the criteria for imposing the goods and services tax (GST) on hotel rooms.
 
The Council decided that the 28 per cent would be imposed on hotel rooms with a tariff of Rs 7,500 above against the previous proposal of Rs 5,000 and above. Rooms with tariffs between Rs 2,500 and Rs 7,500 will attract 18 per cent.

The on restaurants in five-star and luxury hotels has been reduced from 28 to 18 per cent, bringing it at par with standalone air-conditioned restaurants. Food & beverages form 30-40 per cent revenue for five-star hotels. 

Restaurants and bars at a number of hotels (located within 500 metres of highways) have been hit due to a Supreme Court ban on serving liquor.“The revised on rooms and restaurants inside hotels is a favourable move as it reflects the ground realities better. Other than metro cities, most hotels in Tier-II- and -III towns will get a relief on the revised for rooms. This is where a lot of domestic travel takes place,” said Raj Rana, chief executive officer (South Asia) at the Carlson Rezidor, which has a network of 85 hotels in India through brands like Radisson and Park Plaza. 

In a representation to the finance ministry early this month, the (FHRAI), the apex body of the hotels and restaurants sector, had sought a uniform at 12 per cent for the hospitality industry. The delegation requested the government to take a fresh look at the luxury tax limit of Rs 5,000 and enhance it suitably as is followed in most countries of the world. 

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