SHORT TERM ACCOMODATION

[sunil mehta]

A service provider (Hotel ) provides accomodation services to its customers .Hotel has fixed its room tariff for some rooms @Rs.1000/- and above and for few rooms below Rs.1000/-.Suitable exemption has been given vide Notification 31/2011-ST  dt. 25/04/11.TRU circular no.3345/3/2011 dt.25/4/11 has clarified that 'declared tariff' has been defined in the notfn. and it will include all amenities,facilities etc provided in the unit of accomodation. But the circular says that cost of bed will not form part of 'declared tariff'  The bill issued to customer shows (i) regular room tariff ,----Rs.1100/-

(ii)cost of extra bed (ii)Rs.300/- (iii) cost of meals/breakfast  Rs.500/- (iv) laundary chgs. Rs.100/-

Query:-1)What is the amount of services are taxable?

2)Whether cost of extra bed Rs.300/- will form part of taxable services ?i.e taxable value of the bill will be Rs.1400(1100+300) or Rs.1100/-?Since amt. recd. on account of 'extra bed' is in relation to 'Room Tariff' value whether it will be legally advisable to include such valu for purpose of levying service tax?

3)Whether laundary chgs. Rs.100/- will be included ?

AI Summary

Service Tax Applies to Hotel Rooms with Tariffs Rs. 1,000+; Extra Bed Costs Included, Meals/Laundry Not Taxable A hotel provides accommodation services with room tariffs both above and below Rs. 1,000. The service tax applies to short-term accommodations if the declared tariff is Rs. 1,000 or more. The declared tariff includes charges for amenities but excludes discounts. The cost of an extra bed is considered part of the accommodation service, making the taxable value Rs. 1,400 (room tariff plus extra bed). Meals and laundry charges, if billed separately, are not included in the declared tariff for service tax purposes. Laundry charges are not related to accommodation and are not taxable.