Booking a hotel after GST rollout? Here's how much you will pay

Last weekend, the GST council revised tax rates for hotels based on room tariffs. The changes made are marginally positive for the mid-tier hotels whereas the luxury segment may not have much impact. Hotel tariffs between Rs 2,500 and Rs 7,500 would attract a flat GST rate of 18% from earlier proposed 28%.

At present, hotels that charge tariffs in this range pay 21-22% tax. Hotel tariffs above Rs 7,500 would attract GST rate of 28%. The GST council has also reduced tax on restaurants in five-star hotels to 18% from 28%. This is at par with standalone air-conditioned restaurants. For room rates less than Rs 1,000, there will be no tax while those between Rs 1000 and Rs 2,500 will attract GST of 12%. Analysts point out that there would no material impact on margins or cost savings of hotels across categories.

Some point out that mid-sized hotels may pass on the difference of close to 3% in their current and GST tax rate to travellers by slashing room tariffs.



Note: *GST is computed on the actual room rate charged to the consumer **Assumptions for Effective Tax Rate: Published Tariff: Rs 10,000; Discount: 25%; Actual Tariff: Rs 7,500