Sridhar (name changed) got a pleasant surprise on Monday morning when he got a message from an online travel aggregator regarding a booking for Varanasi hotel made in September for stay in November.
“This is an important update regarding your upcoming hotel stay at XXX Hotel. The amount of tax applicable on this hotel booking has now been reduced in keeping with the new GST (Goods & Services Tax) reduction mandated by the GST department. We have therefore initiated a refund of ₹XXXX.X which will reflect in your account in 7-12 working days. Wallet and UPI refunds will take only 1-2 days,” the message read. Sridhar’s friend Arnab too got a similar message for a hotel booking in Shimla.
There could be many Sridhars and Arnabs who are pleasantly surprised by this move as a refund has been initiated, probably for the first time, after GST rate lowered for hotel sector.
In its 37th meeting, held in Goa on September 20, the GST Council rejiged the slabs from four to three and reduced the highest tax from 28 per cent to 18 per cent. To make this effective, the Central Board of Indirect Taxes and Custom (CBIC) and States’ Tax authorities notified the new rates by September 30.
“With the increasing awareness of the need to charge only the applicable GST and refund any excess charged to the end consumer accompanied by the evolution of stable IT processes enabling such refunds, consumers can look forward to fairer business practices from B2C businesses,” said MS.Mani, Partner with Deloitte India.
Normally, many hotels and travel aggregators announce special packages for vacations and long weekends and offer special rates if booking is made in advance. Since, old rates were applicable till September 30, nyone booking by that date for stay in October onwards had to pay higher tax. Technically speaking, if rates have been lowered, then goods/service providers need to pass on the benefit, otherwise the matter could go to the Anti-profiteering Authority.
There have been such instances with goods providers, when many companies were asked to reduce the prices, return the profiteered amount along with interest at the rate of 18 per cent or deposit profiteered amount along with penalty.
Same rules apply to the services also. Now, to avoid action by National Anti-profiteering Authority (NAA), companies can suo motu initiate the process of lowering the price or refund the difference in case of advance booking.
Rajat Mohan, Senior Partner with AMRG said that taxes in the hospitality sector have been rationalised from October 1 resulting in savings of 6-10 per cent in consumers’ budget for hotel accommodation services prospectively.
“In case of advance bookings made in a pre-change tax period, higher taxes were collected by the sector including online aggregators which now needs to be returned. There are reports that some multi-national chain of hotels and some leading online aggregators have suo motu started refunding the excess collection of taxes, as retention of any amount by businesses would make them guilty under anti-profiteering provisions,” he said.
Now, if someone has not received any refund intimation for the hotel booking in India made prior September 30 for stay in October onwards, he/she should ask the hotel or aggregator to do so.
XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.
- Automate Invoicing and get Paid Faster
- Integration with all popular accounting software
- Manage your GST and E-WayBill Software anytime anywhere using multiple devices
Get Our GST Software DEMO and E-WAY BILL DEMO for FREE