ITC ON HOTEL STAY AND FOOD FOR DIRECTORS/MANAGERS

[SAFETAB LIFESCIENCE]

Dear Experts,

Our Directors/Managers visiting outstation on business trip .

Please clarify whether we are eligible for ITC for the following cases.

1. IGST charged on Lodging Bills of Other state hotels.

2. IGST charged on Food Bills of Other state hotels.

3. CGST + SGST charged on Lodging Bills of Local state Hotels where our GST registration is held.

4. CGST + SGST charged on Food Bills of Local state bills where our GST registration is held.

[Rajagopalan Ranganathan]

Sir,

According to Section 12 (3) (b) of IGST Act, 2017, " the place of supply of services by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel shall be the location at which the immovable property or boat or vessel, as the case may be. Therefore the supplier of service in Gujarat State is liable to charge CGST and SGST.

According to Section 49 (5) (e) & (f) of CGST Act, 2017 " the amount of input tax credit available in the electronic credit ledger of the registered person on account of the central tax shall not be utilised towards payment of State tax or Union territory tax and the State tax or Union territory tax shall not be utilised towards payment of central tax.

However the scheme of GST Act seems to be that GST Registration is State specific. Outside the State such person is an "un-registered person".

Therefore, in view of the above hotel owners in a State are liable to charge /cgst and SGST and not IGST though their customers belong to other State. According to Section 49 (5) (e) & (f) of CGST Act, 2017 "the amount of input tax credit available in the electronic credit ledger of the registered person on account of the central tax shall not be utilised towards payment of State tax or Union territory tax and the State tax or Union territory tax shall not be utilised towards payment of central tax. In view of the above my view is that you cannot avail the credit of said taxes paid.

 

[SAFETAB LIFESCIENCE]

Dear Sir,

In response to the reply received by me, I am stating that

I am very clear that CGST + SGST charged by other state suppliers can not be taken ITC.

Your answer is full of about other state's bills with CGST + SGST ONLY.

My question is not that. Some other state persons charging IGST which we can take or not.

My last two questions are purely about local state charging CGST + SGST.

Whether we are eligible to take ITC on the hotel bills for lodging and boarding charged by the local

state suppliers wherein we registered

[SAFETAB LIFESCIENCE]

Dear Sir,

I think the reply posted by Mr. Rajagopal is for issue ID 113939 instead of 113938 (my querry)

[Ganeshan Kalyani]

Sir, you can take credit of the CGST and SGST charged by the hotel in the State where you have registration. The food bill is not eligible for credit as it falls under personal consumption which is excluded in Sec 17(5) of CGST Act.

The hotel cannot charge IGST. The provision stated by Sri Rajagopalan Sir supports this view.

[KASTURI SETHI]

Admissibility of ITC depends on the major factor whether IGST is applicable or CGST & SGST and applicable of these taxes depends upon the determination of place of supply.

In my view in this regard, Rule of thumb is as under:-

(i) If there is movement of goods from one State to another State IGST is applicable. Similarly, if there is a movement of services from one State to another State IGST is applicable barring some situation i.e. Renting of Immovable property etc.. The factor of 'fixed establishment' is involved.

There are other factors also but in most of the cases kind of tax is determined by (i) above.

AI Summary

Input tax credit on hotel lodging: local CGST+SGST credit claimable; food charges blocked as personal consumption. Input tax credit eligibility for hotel expenses turns on the place of supply: lodging is supplied at the location of the immovable property so hotels should charge CGST+SGST where the property is in that State and such tax paid by a registrant in that State is eligible as ITC. Food charges that constitute personal consumption are expressly blocked from ITC. GST registration is State-specific, and credits of central and State tax are separately ring fenced and not mutually utilisable.