As GST applicable on room tariffs created much confusion for the hotel industry and its guests, trade associations had appealed for the rate categorisation for hotels to be done basis the transaction value or actual value rather than on the Declared tariff. The GST was mandated to be levied on the Published tariffs or the Declared tariffs on hotel rooms. However, hotels are known to offer discounts on room tariffs to patrons which alter the Declared rates and which could correspond to a different GST rate as per the prescribed rate slabs on room tariffs. Applying GST rate on Declared Tariff was incorrect and caused confusion for guests.
For instance, if declared tariff on a room stay is Rs 8000 and the stay is charged at Rs 5000, hotels are required to levy a GST of 28 per cent instead of 18 per cent. This is unfair and it increases the tax burden drastically. 18 per cent GST is applicable for room tariffs ranging between Rs 2500 and Rs 7500 and tariffs of Rs 7500 and above attract 28 per cent GST.