This is an add on to the excitement for your upcoming holidays if you already have bookings for your stay in a hotel. As declared in a recent GST council meet, tax on hotel bookings has now been reduced which will allow the refund of excess amount paid by the customer earlier as tax (after calculation as per new GST rates). The refundable amount will reach to the respective bank accounts in 7-12 working days. Wallet and UPI refunds will consume less than 3 days. The news is definitely a pleasant one for those travelling with any purpose and has their stay in a hotel.
Initiation of the GST Provision
The provision was suggested in the 37th GST council meet chaired by FM Nirmala Sitharaman in September and got approved in the same meet. The council was fully convinced that the initiative will promote travel and tourism to a great extent and immediately brought down the GST slabs from the highest of 28 per cent to 18 per cent for the cause.
Central Board of Indirect Taxes and Custom (CBIC) and States’ Tax authorities altogether made the new GST rates on tourism happen from 30 September itself. Now the bookings for the stay in a hotel after 30 September will be charged with new GST rates (18%).
“With spreading awareness to charge only the applicable GST and refund the excess to the end consumer accompanied by the development of stable IT processes enabling such refunds, consumers can look forward to fairer business practices from B2C businesses,” said MS.Mani, Partner with Deloitte India.
Often the hotels, guest houses or travel agencies come up with alluring packages for long or short vacations to invite tourists for bookings from them and have special rates on advance bookings. Since old GST rates are now altered, the current benefits on the bookings should reach the consumer else it could be an issue to be taken by the Anti-profiteering department.
Consequences of Non-Adherence
Registered with the government’s Anti-profiteering department are cases when various manufacturing units didn’t pay heed to the instructions which said that they must reduce the prices for their products (complying with the reduced GST rates). In return, the companies were penalized with the interest of 18 per cent or deposit excess profited amount along with a penalty.
Read Also: GST Impact on Hotel & Tourism Industry After Rate Cut
The same goes for the service sector too. Non-adherence from the companies’ side will lead to strict actions by the National Anti-profiteering Authorities (NAA). Therefore, it is highly advisable for the tourism industry to lower down the prices of their current packages and allot refunds on advanced bookings.
As far as the advance bookings are concerned all the bookings made before the amendments according to the higher GST slab including online collectors need to be re-calculated (putting the new GST rates) and the excess amount derived should be refunded to the consumer. Reports say that some hotel chains and leading online hotel booking agencies have started with the process so that there are no chances of guilt under anti-profiteering provisions.
So on the traveller’s side, if you have not yet received the refunded amount on hotel bookings for your stay after 30 September you can directly ask the hotel or the online aggregator for the reason.
