15 Jan 2018Posted By: Pooja

Know the key components of the Travel-Bill to avoid GST gambit while Planning your holiday outdoors

If you are going to plan your holiday package in your dream destination and you are going to check in a deluxe hotel or suite, you must be well aware of the procedure of creation of bills in the restaurant, and how the newly enforced GST is interpreted over there.

The newly enforced GST regime has indeed different inferences for different sectors of the economy, namely Agriculture, Manufacturing, and Service sectors. The bill has been comprehensively drafted, keeping in view the demands of all these sectors, and has separate directives for each of them. Nevertheless, the deceptive market players in each sector are active in their ploy to fleece their customers in the name of indirect taxes and surcharges. In this regard, it is very important to peek into the status quo in the travel and tourism industry.

There have been endless complaints from the customers regarding undue extortion in the name of GST and service charges. To steer clear of the confusion related to the service charges, it is very important to understand that the basic components of a bill that the manager of a restaurant or hotel may endorse in your name:


Goods and Service Tax:

Indubitably, your travel plan will cover all the major aspects of your holiday package, viz. Food, lodgings, and transportation. So, it’s worth knowing how GST is to be implemented individually in these segments:-


Goods and Service Tax on Restaurant:


At the GST 23rd council meeting that was held on 10th November 2017, the GST on the restaurant was reduced to 5% of the menu, which was earlier 18% in case of AC and 12% in non-AC restaurants. This is indeed a big relief for the gastronomes.


On Hotel rentals:


Renting of rooms in hotels, inns, resorts, clubs, campsites and other commercial abodes for residential or lodging purposes have different rates of GST depending on their room tariffs:


  • For those having room tariffs between ₹1000 and ₹2500 per room per day, GST@12% is chargeable.

  • For those having room tariffs between  â‚¹2500/- and ₹5000/- per room per day, GST@18% is applicable.

  • In case of accommodation in 5-star and above rated hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, where room rental is ₹5000/- or above per room per night  GST@28% is applicable.


Goods and Service Tax on Transportation:

Rate of GST is different in case of different modes of travel:-

(i) For Air conditioned contract/stage carriage other than motor-cabs - GST@5% of the total tariff is chargeable.

(ii) For radio taxi - 5% GST is chargeable.

(iii) In case of Transportation by rail (other than sleeper class) - 5%

(iv) In case of air travel:-

  • GST@5% in case of economy class.

  • For those traveling in a premium cabin, (other than economy class) - GST@12% is chargeable.


Note:- Those customers who opt for Travel Package Combo, Goods and Service Tax @ 5% is applicable.


Exemption from GST:


Passengers shall not be charged for GST if,


1.They are traveling with or without their belongings, and their-


Air travel is embarking from or terminating in an airport located in the North-East states like Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra region located in West Bengal;


2.Services are provided by a tour operator to a foreign tourist in relation to a tour conducted entirely outside India.


Service Charge:

Very importantly, this is not obligatory on the customer. However, it may be voluntarily given by customer as a tip if he is pleased with the quality of service or hospitality of the staff. In case of the service charge is enforced on a customer, he may approach the consumer forum or the consumer court.

Learn more about GST:

In case you need any assistance regarding online GST registration, or you have any inquiry regarding online GST registration process in India, feel free to contact our business consultants at 8881-069-069.


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