GST Council cuts tax rate on hotel room tariffs; Caffeinated drinks to get costlier

New Delhi, Sep 20: The GST Council on Friday cut tax rate on hotel room tariffs, a move aimed at giving a boost to the hospitality sector.

The GST (goods and services tax) rate on hotel rooms with tariffs of up to Rs 7,500 per night has been cut to 12 per cent from the existing 18 per cent.

Additionally, the GST Council has reportedly decided to increase the tax rate for caffeinated drinks to 28 per cent from 18 per cent. An additional 12 per cent cess would also be imposed on such beverages.

Similarly, the tax on room tariff of above Rs 7,500 has been slashed to 18 per cent from the existing 28 per cent. There will be no GST on room tariffs of below Rs 1,000 per night.

Commenting on the decision, Sanjay Sethi, CEO, Chalet Hotels said the reduction would give a major fillip to the hospitality and tourism industry and make hotels more competitive globally.

"For companies like Chalet, reduced taxation helps us focus our efforts on key aspects like fresh investments in portfolio expansion, job creation and creating sustainable green hotels," he said.

The GST Council has also agreed to lower tax rates on outdoor catering to 5 per cent, with the option to avail input tax credit.

Exemption from the GST has been given to imports of specified defence goods that are not manufactured in India. A uniform GST rate of 12 per cent will be levied on woven/non-woven polyethylene bags.

The cess levied on top of the maximum 28 per cent tax rate on petrol vehicles with capacity to carry 10-13 persons has been reduced to 1 per cent and the same for diesel vehicles has been cut to 3 per cent.

The tax on almond milk has been set at 18 per cent, she said adding all rate changes would be effective from October 1. The GST on slide fasteners (zips) has been reduced to 12 per cent from 18 per cent earlier.

Also, the tax on diamond job work has been reduced to 1.5 per cent from 5 per cent earlier. The same on supply of machine job cut to 12 per cent from 18 per cent.