The Central Board of Indirect Taxes and Customs (CBIC) stated that hotels with room tariffs exceeding ₹7,500 per day will be categorized as ‘specified premises,’ with their restaurant services attracting an 18% GST rate with an input tax credit (ITC). For restaurants outside these premises, the GST rate will be 5% without ITC.
The frequently asked questions (FAQs) have been issued by the board following a decision on the same concern at the 55th GST Council meeting. The updated rules shall come into force from 1st April.
Under the updated rules, the hotels can voluntarily opt in for the ‘specified premises’ category if the room tariff does not surpass ₹7,500 in the previous fiscal year, with the declaration staying valid until the establishment opts out of the same.
The same facilitated procedure is anticipated to remove the requirement for the annual filings. Separate declarations are mandated for each premise.
The amendment has the objective of connecting the GST rate to the actual value of the given accommodation, with the applicable GST on the restaurant services in hotels based on the rates of accommodation.
The process shall provide the hotels with the choice to show their premises as ‘Specified Premises’, enabling restaurants in these hotels to take 18% GST with ITC on restaurant services.
The GST council solves a protracted dispute on imposing the GST on restaurant services inside a hotel, with the hospitality industry asking for clarity on the case.
