Impact of GST
 

So what is happening with hotel & restaurant prices now that GST will start in a few days' time? Does the final total cost go up, down or stay the same?

Do some taxes disappear and get replaced by GST?

28% on hotels charging >5000 INR/night, 18% on a/c restaurants. Enjoy!

http://economictimes.indiatimes.com/...w/58757234.cms

Not applicable (yet) in Jammu, Kashmir & Ladakh. Glad to see at least one state legislature trying to tell the federal/union government to go pound sand, even as I anticipate that they will capitulate eventually too.

I anticipate some creativity from businesses. Restaurants that split into a food selling business and into a nearby seating business. Hotels that lower their rates but then charge for compulsory "incidentals" like getting electricity in the room, sheets, maid service, and so on.

However, considering the plethora of taxes currently in place (e.g. luxury tax), what will the NET impact be? Presumably (hopefully) these extraneous taxes will then die? And what about the 'Swachh' tax for a non-swachh India?

Incidentally I recall reading that the tax rates for hotels priced up to INR 7,500 will be 18% - is that correct?

if you take away the luxury tax then the taxes amount will pretty much stay the same as it was before....

Isn't the trigger for 28% at INR 7500 per night ? (Actual rate paid in most places, but published date in Delhi !)

did a cash & points reservation at the itc grand central in mumbai where the cash portion is less than inr 5k....i'm still being charged 28%....i asked them for a clarification on this but they are clueless at the moment....said they would get back to me in a week with the explanation....

I just checked rates for a few SPG hotels around Delhi. The 4P Delhi Airport correctly charges 9% GST onlyon a base rate of INR 5,700 and the Westin Gurgaon correctly charges 28% GST only on a base rate of INR 8,100.

Contrary to this, the Park New Delhi charges 15% Luxury Tax on a Rack Rate of Rs 5,999 + "Krishi Kalyan" tax of 0.3%

All these were for stays in October!

PS. What happens to F&B charges - are these matched to the GST rates applicable to the rooms at the property? If so, what happens if the hotel has some rooms below the INR 7,500 slab and other rooms above that level? So what rate do you pay for a cup of coffee at the restaurant?

F&B should get the 18% like A/C restaurants? Here in Germany we also have a plethora of different VAT rates for different services, the hotels split it all out in line items that all get different VAT rates.

My knowledge was that the previous taxes were making around 18%. So for the hotels above 7500 rs, the increase would be 10% (new GST: 28% vs. old taxes 18%).

it wasn't exactly 18% of the room rate....it was a bit more complicated than that....

the vat was 1.25%, the service tax was 8.4% & the luxury tax was 10%....but the luxury tax was calculated on rack rate....

so lets suppose the room rate was inr 7.5k & the rack rate of that room was inr 12k....so all taxes combined would come to inr 1,923.75 which would be roughly 26%....

it would differ from room to room depending on the rack rate but at the end of the day the places that charged luxury tax would end up charging roughly between 25-30% of your eventual room rate....

@Keyser

very good explanation.

Are tourist have to pay more than Indian residents for hotels and other things? :confused:

i'm not aware of any difference in taxes at hotels between residents & tourists....

Am I wrong that the luxury tax on rack rate racket was only prevalent in Delhi, while other metros charged it on the actual rate paid?

Is the new VAT applied on rack or actual rates - in Delhi and elsewhere?

not just delhi....there were a number of other states that charged it as well....

my firm represents the fhrai (federation of hotels & restaurants association of india)....for now the department of tourism has informed the fhrai that the tax bracket the room falls under will still be determined by the rack rate....

for example, lets supposed the rack rate for a particular room is inr 10k but the hotel is offering that room for inr 5k....the highest rate bracket of 28% will apply (because the rack rate is over inr 7.5k) but will only be charged on the room rate which is inr 5k....