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The GST rate for a hotel under composition

Hotels that opt for the composition scheme under GST (Goods and Services Tax) are subject to a flat rate of 6% on their turnover. This rate is applicable to both AC and non-AC restaurants, as well as hotels and lodges with a room tariff of up to Rs. 1,000 per day.

It is important to note that hotels and lodges that opt for the composition scheme cannot claim input tax credit (ITC) on their purchases. Additionally, they cannot issue tax invoices or collect tax from their customers. Instead, they are required to issue a bill of supply.

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The composition scheme is a simpler and more convenient option for small businesses with an annual turnover of up to Rs. 1.5 crore. However, it is important to evaluate the benefits and drawbacks of the scheme and determine whether it is the right choice for your business.

FAQs:

What is the GST rate for hotels under the composition scheme?
The GST rate for hotels under the composition scheme is 5% of their turnover.
Can all hotels opt for the composition scheme?
Hotels with an annual turnover of up to ₹1.5 crore can opt for the composition scheme.
Is Input Tax Credit (ITC) available under the composition scheme?
No, Input Tax Credit is not available under the composition scheme.
Are hotels required to file regular GST returns under the composition scheme?
Hotels under the composition scheme must file a quarterly return in Form GSTR-4.
Can hotels under the composition scheme charge GST on bills?
No, hotels under the composition scheme cannot charge GST on bills separately. They pay a fixed percentage based on turnover.
What are the conditions for hotels to opt for the composition scheme?
Hotels must have a turnover below ₹1.5 crore and cannot provide services except for interest or discount on deposits.
Are luxury hotels eligible for the composition scheme?
No, hotels providing luxury services or having high turnover above the limit are not eligible for the composition scheme.
What if a hotel’s turnover exceeds ₹1.5 crore under the composition scheme?
If the turnover exceeds ₹1.5 crore, the hotel must switch to the regular GST scheme and file monthly returns.
Do hotels under the composition scheme need to maintain detailed accounts?
No, detailed record-keeping is not mandatory under the composition scheme, but they must keep basic records of their turnover.
Is e-way bill compliance applicable for hotels under the composition scheme?
Yes, hotels under the composition scheme must comply with e-way bill regulations if applicable.