GST Council has provided a big relief to the Hotel Industry by finally accepting the transaction value as the assessable value for determination of GST rate.

Now, a customer will not be charged a higher rate of tax for hotel stay if he has stayed in a luxury room at discounted prices. Before such change one had to pay GST at the rate of 28% if the declared tariff of the room was more than Rs 7500 even if he had paid less as usually final room tariffs are lower on account of discounts.

The Hotels have three GST rate slabs — first one is for Rs 1,000 and Rs 2,500 per day room tariff at 12% with input tax credit; second is for those having per day room tariff above Rs 2,500 but less than Rs 7,500 at 18% with input tax credit; third is for five stars and those with room tariffs above Rs 7,700 at 28% with input tax credit

A huge credit also goes to the Hotel industry who had lobbied hard for this change since the GST roll out in July’2017.

The centre and the stated have notified the change replacing the declared “tariff” with “value of supply” which is equivalent to the transaction value.

However, the change has been restricted to the room tariffs and not extended to restaurants inside the hotels.

For any queries/clarification you may contact


CA. Bharat Poplani