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(Source: Reuters/ The Financial Express)

Good news! Your holiday stay to get cheaper; here’s how this new GST rule will work

It’s good news for travellers and anyone who requires a hotel stay, as accommodation is set to get cheaper after a crucial tweak in rules by the Goods and Services Council last week.

The council on Saturday decided that the GST on accommodation service will be chargeable on ‘transaction value’, rather than the ‘declared tariff’, which means that customers will now save additional tax if hotels offer discounts.

Different GST slabs are levied on different accommodation prices.

Under the GST regime, for tariff up to Rs 999, there is no tax. For tariff from Rs 1,000 to Rs 2,499, the GST rate is 12%; from Rs 2,500 up to Rs 7,499, the GST is 18%; from Rs 7,500 and above, the GST rate is 28%.

Under the previous rule, the GST was charged on the declared tariff. For example, if a hotel room’s declared tariff is Rs 10,000, it would fall under the highest tax slab of 28%. If a customer were to book that room at a discounted rate of Rs 7,000, the person would have to pay 28% tax on the booking amount.

Now under the new rule, the customer will pay tax on transaction value, which will be 18% on Rs 7,000 as it falls under 18% tax bracket, Garish Oberoi, president, Federation of Hotel and Restaurant Associations of India (FHRAI) explained.

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