Hotel rooms below Rs 1,000 were previously exempt from GST and those above the threshold were charged 12% tax. Rooms above Rs 7,500 fell under the 18% GST tax bracket.
According to a press release issued by the GST Board on June 29, 2022, “Hotel rooms priced up to Rs 1,000/day will be taxed at 12%.” (However, the government has yet to issue a notification in this regard.)
After July 18, 2022, the GST that will be charged on the hotel room will be as follows: rooms costing up to Rs 7,500 will incur 12% GST and those above Rs 7,500 will be subject to an 18% tax.
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To explain how it will impact you. Suppose you book a hotel room for two nights at the price of Rs 900 per night. Prior to the announcement of the GST council, you had to pay a total amount of Rs 1,800 and no GST was levied on it. However, from July 18, 2022, GST at the rate of 12% will be levied. You will have to pay Rs 1,800 plus Rs 216 in GST. The total amount to be paid by you will be Rs 2,016 as hotel room charges.
However, small hoteliers may still qualify for GST payment relief. “As a relief, very small hotels will still not be covered by GST if their annual income is below the taxable limit of Rs 20 lakh,” Harjani said.