Resorts charging 18% GST as against 5% in their restaurants

[vivin vijay]

As per the recent ruleing restaurant we're to charge 5 percent as against 18 percent but we're not allowed to claim input credit. However, for resort they were given an option that if room rate is more than 7500 then they can charge 18 percent and cliam input credit . This is the background, now I went to a resort recently where my room rate was 5000 but I was charged GST at 18 percent the reason given by the resort was even if one room has a charge over 7500 they can charge at 18 percent for every room .

My question is

can a resort just charge a higher rate for just one room so that they can claim input credit and charge customer 18 percent for all other rooms ?

How do you make suggestion to the GST council regarding practices followed ?

[KASTURI SETHI]

In my view, this practice is not correct. Email ID of Chairman, GST Council is available on google or department's site.

[Ganeshan Kalyani]

Practically speaking if GST rate is 5% the basic charges will be more and if GST rate is 18% the basic rate will considerably be less. However, as you desire you may email your consideration to the authority.

[Rajagopalan Ranganathan]

Sir,

In my opinion gst is not levied room wise. It is levied on the resort. Therefore the rate of gst should be uniform for the entire resort. Since rent for one room is less than ₹ 7500/- they cannot charge lesser rate.

[Ganeshan Kalyani]

Yes , I agree with your view Sir.

[vivin vijay]

Rajgopalan Sir, all rooms are charged bellow 6000 except for one room they have kept at 7500 to get the benfit of input tax credit . It's not the other way around .

[KASTURI SETHI]

Dear Querist,. You must make a representation to GST Council. This practice should be brought to the Notice of the GST Council. Evidence should be there.

[Rajagopalan Ranganathan]

Sir,

The various input services provided to the resrot like maintenance, cleaning etc the service provider will not provide invoices for each room separately . he will issue only a consolidated invoice. In that case you can take entire gst paid by the supplier of the service and then reverse credit in respect of exempted rooms which are chargeable ₹ 6000/- towards rent. You have to do this reversal as per Section 42 of CGST Act, 2017. In my opinion it is cumbersome. Therefore it will be easier to pay tax @18% and avail the entire ITC.

AI Summary

Uniform GST rate application: resorts cannot reprice one room to treat all rooms at higher GST and claim input credit. The tax rate must be applied at the resort level rather than room wise: a resort should not reprice a single room merely to treat all rooms as taxable at the higher rate. A resort may choose to charge the higher rate and avail input tax credit for the establishment, but where supplies to some rooms are lower taxed the operator must perform the prescribed credit reversal mechanism for input tax attributable to those rooms. Evidence of the practice can be submitted to the GST Council.