Reverse Charge on Overseas Hotel Booking

[JIGAR SHAH]

Our client is a tour operator managing overseas tours like Dubai, USA, etc. For organising tour, they are making payment to overseas suppliers on behalf of their customers. Will Reverse charge applicable on payment made to overseas suppliers for hotel booking, etc?

[Vinay Kumar]

No need to pay GST here. Because as per Section 13(b) of IGST Act, 2017 "in case of any service provided by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a houseboat or any other vessel" the place of supply shall be place of such immovable property. Here, as the immovable property is outside India, the Place of Supply shall be outside India. Hence, there is no need to pay GST.

[SHARAD ANADA]

Foreign hotel booking is input services for tour operator for providing out put services of tour booking. He is importing services and in my view he is liable to pay GST on RCM basis. Hotel owner is out side India hence GST is not applicable to him. But applicable to tour operator in India on RCM basis.

[KASTURI SETHI]

In this context, Serial no.55 of notification no.9/17-IT (Rate) is worth perusing before arriving at final decision by the querist.

[JIGAR SHAH]

Dear all,

Thank you for the response towards the query.

[Rakesh Chitkara]

CESTAT Larger Bench is to be constituted to hear matter related to Out Bound Tourism, arising out of Cox & Kings and Thomas Cook judgements which had quashed such Service Tax demands. I too have filed appeals on this issue.

Please exchange notes with me if you too have similar issue.

AI Summary

Reverse charge on imported services may apply to overseas hotel bookings, potentially obliging tour operators to pay GST under RCM. Whether reverse charge applies depends on place of supply and import status: lodging is supplied at the location of the immovable property, so foreign hotels have place of supply outside India and Indian GST may not apply; conversely, foreign hotel bookings can be treated as imported services, potentially triggering GST liability on the Indian tour operator under the reverse charge mechanism. Related rate notifications and outbound tourism precedents have been relied upon in disputes.