Good News for Hotel Customers as GST Refunds Initiated

The 37th GST Council meeting held in September in Goa yielded several reforms in tax rates and returns. However, for those bitten by the travel bug, the best news yet was that GST rates were going to be slashed on hotel stays and that even includes luxury hotel accommodation.

For hotels charging room rents of over Rs.7,500 a night, the highest slab of 28% GST applied to them. Now, that rate has been brought down to 18%. While there will be no GST on hotels with a nightly room rate of up to Rs.1,000, all hotels charging Rs.1,001 to Rs.7,500 a night will fall in the 12% GST category. 

This move will be a real boost to the travel and tourism industry in India, which took a hit, as many tourists shied away from expensive hotel stays, especially luxury hotels due to the hefty GST rates that were initially imposed.

Since the old GST rates were applicable until September 30th, hotels and hotel aggregators have started refunding the amount of GST paid on bookings done until this date for stays after October 1st.

Several persons who had already done their bookings are now getting SMSes from various travel aggregators stating that the excess GST amount is being refunded due to a GST reduction mandated by the GST department.

Also Read: Number of tax forms dipped to 12 versus 495 after GST implementation

In fact, it is required by law that businesses refund the amount of excess GST charged in cases where the GST rates have been lowered post a notification released or a change in the law. They could face action by the National Anti-profiteering Authority (NAA) in cases where they have not done so. 

The actual refund is expected to take 7-12 working days to reflect in a customer’s bank account, while the process of getting refunds into online wallets are significantly faster.

For customers not expecting to get this money back, this definitely comes as a pleasant surprise now. Customers who haven’t received this message yet should contact their hotel or travel aggregator now to get their refunds initiated.

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in