GST Registration for Hospitality Business

India’s hospitality industry is a key driver of growth in the country’s service sector, and is often a top revenue producer. It’s expected to continue growing, thanks to the country’s large tourism potential.

Over the past 15 years, hotel brands have organized and established the industry as a service-based rather than reality-based sector, making them a vital part of India’s hospitality industry.

The hospitality industry has benefited from the Goods and Services Tax through standardized tax rates and improved use of input tax credit.

Let’s understand all about GST and GST Registration for Businesses in the hospitality industry.

Benefits of GST on the Hospitality Industry in India

The implementation of GST has brought several benefits to the hospitality and tourism industry in India.

Firstly, the introduction of a single tax regime has brought uniformity to the indirect tax system and subsumed multiple taxes.

This means that services that were earlier taxed separately under the VAT regime, such as the complimentary breakfast, are now taxed as a bundled services under GST.

The reduction of cascading tax effects has also decreased the final cost for the end consumer under the former indirect tax regime.

The hospitality industry can now benefit from this as hoteliers and restaurant owners are able to avail and utilize input tax credit in a better way than before.

Various GST Rates Applicable in Hospitality Industry

Hotel Accommodation Service-

Transaction Value per Unit (in Rs) per Day	GST Rate
Rs. 1000 and less	Nil
Rs. 1001 to Rs. 7500	12% with Full ITC
Rs. 7501 and above	18% with Full ITC

Rates applicable on restaurant business-

Categories of business	Rate of tax
Standalone restaurants	5% without the benefit of input tax credit
Restaurant part of a hotel (where declared takeaway and accommodation charges are not exceeding Rs 7500)	5% without the benefit of input tax credit
Restaurant part of a hotel (where declared takeaway and accommodation charges are exceeding Rs 7500)	18% with the benefit of input tax credit
Regular Catering services on contract basis in office, industrial unit, school, college, hostel etc.	5% without the benefit of input tax credit
Outdoor catering services	18% with the benefit of input tax credit

Understand the latest GST Rates at: GST on Hotel & Tourism Industry

Disadvantages of GST:

One of the drawbacks of GST is that it requires businesses to become more technologically adept, resulting in an increased technological burden and compliance costs. However, utilizing services of GST Return Filing Online from E-StartupIndia can be economical and beneficial for choice. Because, E-StartupInia has technology and experts who can handle your GST compliances without you having to worry about anything.

Another downside of GST is that while it has led to some cost reductions, they may not be significant, particularly in industries such as hospitality, where taxes have been reduced but only slightly. For instance, in Maharashtra, hotel rooms were previously taxed at 19%, and food and beverage at 18.5%. Although the current GST rate of 18% is lower, it may not result in substantial cost savings for businesses.

Furthermore, the hospitality industry in India still lags behind its Asian counterparts such as Japan and Singapore, which have much lower tax rates (8% and 7%, respectively) and are popular tourist destinations. Despite being a global tourism hotspot, India may miss out on attracting the backpacker crowd due to the relatively high tax rates.

Stepwise Process to get GST Registration

Determine the eligibility: Determine whether your business falls under the category of “Hospitality Industry” or not. The hospitality industry includes hotels, restaurants, resorts, and similar businesses.
Gather the required documents: To register for GST, you will need to provide several documents, including:
- PAN Card of the business or company
- Aadhaar Card of the promoters or directors
- Proof of address of the business
- Bank account statement or canceled cheque
- Digital signature of the authorized signatory
Apply for GST registration: Once you have gathered all the required documents, you can apply for GST registration online through the GST portal (https://www.gst.gov.in/).
Fill in the application form: Fill in the GST registration application form, providing all the required information such as the name and address of the business, PAN card details, and bank account information.
Submit the application form: After filling in the application form, submit it online along with all the required documents.
Verification of the application: The GST department will verify the application form and the documents provided by you. If any information is missing or incorrect, they may ask for additional information or clarification.
Receive the GST registration certificate: If the application is approved, you will receive a GST registration certificate from the GST department. This certificate will contain your GSTIN (Goods and Services Tax Identification Number). Read: How to Download GST Registration Certificate
Display your GSTIN: Once you have received your GST registration certificate, you must display your GSTIN at a prominent location in your business premises. Understand about it in detail through reading our post available at: Display of GST Registration Certificate and Penalties
File regular GST returns: As a registered GST taxpayer, you will be required to file regular GST returns on a monthly, quarterly, or annual basis, depending on the turnover of your business.