Hotels to charge GST on rack rates

The Goods and Services Tax (GST) for hotels will be charged on the rack rates, or declared rates of hotels, which will have a considerable impact on the hotel industry. According to the notification number 11/2017-Central Tax (Rate) New Delhi, dated June 28, 2017, “For accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, the ‘declared tariff’ will be the basis of tax to be levied.”

Declared tariff has been explained as to  include charges for all the amenities provided in a unit of accommodation (given on rent for stay), like furniture, air conditioner, refrigerator or any other amenities, but without excluding any discount offered on the published charges leading to some ambiguity.

However, Rashmi Verma, Secretary Tourism, Government of India, had announced in an interactive meeting in Mumbai that the GST rates are on actual invoiced rate and not on published tariff. She also assured to look into any discrepancy or anomaly in the language or wordings of the same.