Admisibility of Input Tax Credit on Hotel Stay

[Kaustubh Karandikar]

XYZ (Maharashtra) had arranged a Customer meet in a Hotel in Bangalore towards sales promotion. The Hotel is ready to issue to separate bills viz. one for food and other for stay. The Hotel will be charging IGST in the invoice issued to XYZ in the name of XYZ, Maharashtra. Can XYZ take input tax credit against the bill for hotel stay?

[DR.MARIAPPAN GOVINDARAJAN]

Since it is in furtherance of busines ITC is eligible.

[Alkesh Jani]

Dear Sir,

In this regards my point of view is that, the Hotel cannot charge IGST, for this purpose the definition of location of supplier give at Section 2(15) (a) of IGST,2017 may be taken into account, further, as the Hotel is located in the state and services are also supplied in the same state, in terms of Section 7(3) of the IGST, Act,2017, is not applicable.

Moreover, Section 12 (3)(b) of IGST, Act,2017, clearly states and mentions of Hotel, for which place of supply will be “Intra-state”.

In view of above, although, Hotel is ready to issue Invoice charging IGST, it is not advised to take the ITC. If audit is undertaken of Hotel even after 4 years, and if the same credit is disputed, XYZ is required to be reversed along with interest.

Any different view by our experts in the matter is highly solicited.

Thanks,

With regards,

[YAGAY andSUN]

We endorse the view of Mr. Jani as Hotel is liable to Charge only CGST + SGST and the ITC is claimed only when the service recipient is registered at this very State where such services are being provided.

[SHIVKUMAR SHARMA]

I agree with the Reply of Shri Alkesh Jani.

[KASTURI SETHI]

Well done by Sh.Alkesh Jani.

[Alkesh Jani]

Dear All,

Thanks for your support.

With regards,

[DR.MARIAPPAN GOVINDARAJAN]

The service recipient will register in Karnataka only he does supply in that State. Otherwise not required.

AI Summary

Debate Over ITC Claim for Hotel Stay: Experts Dispute Proper Tax Charges Under GST Rules XYZ, a company from Maharashtra, organized a customer meeting at a hotel in Bangalore for sales promotion. The hotel agreed to issue separate bills for food and stay, charging IGST on the invoices. A user in the forum questioned whether XYZ could claim input tax credit (ITC) on the hotel stay bill. One expert argued that ITC is eligible as it is a business expense. However, others, including Alkesh Jani, contended that the hotel should charge CGST and SGST instead of IGST, as the service is intra-state. They advised against claiming ITC due to potential audit disputes.