GST Council lowers tax rate on hotel tariffs; gives relief to outdoor catering

The GST Council has agreed to lower tax rates imposed on the hotel industry during its meeting on Friday. Led by Finance Minister Nirmala Sitharaman, the all-powerful council decided to tax hotels on rates varying from 18 to zero per cent, depending on their tariffs. With this, the hotel industry has been removed from the 28 per cent tax slab, the highest under the GST regime.

Several decisions have been taken to boost tourism, said the Finance Minsiter after the GST Council. The panel has decided to tax hotels with room tariff of Rs 7,500 and above at 18 per cent instead of the earlier 28 per cent. Hotels with tariffs in the range of Rs 1,000 to Rs 7,500 will have to pay GST at a rate of 12 per cent. Lastly, hotels with tariffs below Rs 1,000 have been exempted from paying taxes under the GST regime.

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On outdoor catering in instiutions with daily tariff of Rs 7,500 or more, GST has been reduced to 5 per cent from the earlier 18 per cent but without the option to avail input tax credit. The rate shall be mandatory for all kinds of catering. Meanwhile, indoor catering in premises in similar establishments shall remain at 18 per cent with input tax credit.

Additionally, the GST Council has reportedly decided to increase the tax rate for caffeinated drinks to 28 per cent from 18 per cent. An additional 12 per cent cess would also be imposed on such beverages.

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