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Hotels charging less than Rs7,500 a day will subject to 18% GST

LiveMint logoLiveMint 18-07-2017 Gireesh Chandra Prasad

New Delhi: The government on Tuesday clarified that accommodation in hotels including 5-star hotels charging a tariff of less than Rs7,500 a day is subject to a goods and service tax (GST) of only 18%.

“Star rating of hotels is, therefore, is irrelevant for determining the applicable rate of GST,” said a government statement. The clarification comes in the wake of doubts whether 5-star hotels are liable to pay 28% GST irrespective of their tariff, said the statement.

The GST Council had on 18 June fixed 28% GST rate on 5 star and above rated hotels, where room rent is Rs7,500 and above per room per day. Tuesday’s clarification makes it clear that what determines the tax rate is the tariff, not the star rating.

Separately, finance minister Arun Jaitley informed the Rajya Sabha in response to a question that textile traders’ demand for tax exemption for fabrics cannot be accepted as it will break the chain of tax credits. Besides, nil GST on fabrics will result in zero rating of imported fabrics, while domestic fabrics will continue to bear the burden of taxes on items that go into their production, the minister said.

“Necessary steps have been taken to facilitate taxpayers to take GST registration. GST Sewa Kendras have been set up in various centres to handhold taxpayers and to provide all necessary guidance regarding GST compliance,” a finance ministry statement said, quoting the minister.

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