TaxTMI 
TaxTMI 
GST on hotel room rent input use
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....ST on hotel room rent input use <br> Query (Issue) Started By: - KS Bhat Dated:- 30-6-2026 Goods and Services Tax - GST <br> Got 8 Replies <br> GST<br> <br> Hotel (lodging Service) Actual Rate below 7500 per day In the Month of October 2025 RTP has booked sales of Rs 100000 and utilised credit ledger for output ie 12000 rs. not discharged by cash ledger. Enf. Officer visited the premises and infor....
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....med input wrongly taken hence 1st you need to reverse ineligible input taken ie 12000 by using cash ledger and again you need to discharge output tax liability ie( 5%) 5000 using cash ledger. On 100000 transection total libility will be 12000+5000 17000 Rs tax along with interest and penalty in addition is the officer stand is correct on tax libility ? --Reply By: Shilpi Jain The Reply: just be....
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....cause the rate of tax is 5% does not mean that it cannot be paid using eligible ITC. In this case eligible ITC can be used to pay output tax --Reply By: KASTURI SETHI The Reply: The department's stand is absolutely correct de jure. It is explained below. (i) The party availed and utilized ITC UNLAWFULLY. So the same was required to be reversed along with interest and penalty. (ii) Since there w....
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....as no sufficient balance of eligible ITC in Electronic Credit Ledger, so the visiting Officers advised the party to deposit the amount in cash, Thus we can say it is reversal of ITC by way of cash. First issue is closed here. (iii) Second issue raised by the department is to pay GST @ 5 % on outward supply of service. The department is correct. (iv) Both issues cannot be intermingled by you. --Rep....
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....ly By: Sadanand Bulbule The Reply: Once the output tax liability is already paid through wrongly availed ITC, the law demands reversal of such ITC with interest and penalty, but not double recovery of the very same tax again in cash. --Reply By: KALLESHAMURTHY MURTHY K.N. The Reply: Sir, There was a logic involved in the query. The rate of taxes w.e.f. 1st October 2025 restructured into two ....
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....primary slabs 5% and 18%, apart from 40% on sin commodities and luxuries. When ITC is used, the rate of tax applicable will be 18%. In this case, the tax rate applicable is 5% without ITC. As per the query, the tax on Rs. 100000-00 is worked out at 12% (old rate) and paid out of ineligible ITC availed at Rs. 12000-00. Logically, there was no actual payment of output tax, since it was set off again....
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....st ineligible ITC; however, the amount of Rs. 12000-00 paid stands reversed as it was debited to the Credit ledger. So, the payment of output tax payable in cash of Rs. 5000-00 along with interest is correct. Enf. Authority is right on this point. Again, payment of ITC of Rs. 12000-00 in cash along with interest is not required as it stands not utilised, and output tax is being paid now in cash. P....
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....enalty is payable only if statutory notices are issued and adjucated u/s 73/74. He doesn't need to pay the penalty if he paid the output tax in cash, voluntarily on the advice of the Enf. Authorities. So the liability is Rs. 5000-00 + interest through the cash ledger only. Penalty and ITC of Rs. 12000-00 in cash + interest are not payable. In case ITC is treated as utilised, it should be considere....
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....d to the extent of the actual output tax liability, and the remaining ITC should be considered as reversed and ITC payable along with interest to the extent of utilisation against output tax liability, i.e. Rs. 5000-00 + interest. So, there is no differentiation over the first explanation. However, it would be wrong to treat it as utilised where it was ineligible ITC, which is actually a shadow in....
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.... nature. --- Sub-Reply By: KASTURI SETHI The Sub-Reply: Dear Sir, Full facts have not been disclosed in the query. No querist/tax payer likes to disclose full facts on public forum. The element of voluntary reversal/deposit is absent. So many issues are involved and I do not want to discuss here on presumption. --- Sub-Reply By: KASTURI SETHI The Sub-Reply: Dear Sir, Many questions ....
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....can be posted here, if the querist is willing to answer. --- Sub-Reply By: KS Bhat The Sub-Reply: Sir this explanation looks very much correct --Reply By: KS Bhat The Reply: Sir Input used for 12000 liability is ineligible input because of 22/09/2025 notification Lodging facility do not have any other rate taxable service apart from 5% lodging service <br>***<br> Di....
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