GST Rate Changes for Hotels and Restaurants
Summary of Notification No. 05/2025 (Effective 1st April 2025)
This notification redefines the classification of “specified premises” and outlines changes in GST treatment for hotel and restaurant services. Below are the key points:
Key Highlights
- Restaurant Services in Hotels:
- Tax Rate: Restaurant services in hotels will attract 18% GST with Input Tax Credit (ITC).
- Condition: The hotel’s accommodation charges must exceed ₹7,500/day per unit.
- Option to Opt for 18% GST with ITC: Hotels must file a declaration before the start of the financial year to avail this scheme.
2. Redefined “Specified Premises”:
- Updated Definition: Premises will be classified as “specified” if they meet one of the following conditions:
- (a) Value-based Criteria: In the previous financial year, any unit of accommodation exceeded ₹7,500/day or its equivalent.
- (b) Declaration by Existing Registrants: A registered person files Annexure VII between 1st January and 31st March of the preceding financial year, declaring the premises as specified.
- (c) Declaration by New Registrants: A new registrant files Annexure VIII within 15 days of receiving the acknowledgment for their GST registration application.
3. Opt-Out Mechanism: Registered persons wishing to opt out of the specified premises category must file Annexure IX within the January–March window of the preceding financial year.
Compliance Actions for Stakeholders
- For Hotel and Restaurant Operators:
- Ensure declarations are filed on time (Annexure VII or VIII) to classify or opt-out of “specified premises.”
- For restaurants in hotels exceeding ₹7,500/day, ensure the option for 18% GST with ITC is exercised before the start of the financial year.
2. For New Registrants: File Annexure VIII within 15 days of receiving registration acknowledgment to declare premises as specified, if applicable.
3. For Opt-Out Entities: File Annexure IX during 1st January–31st March of the preceding financial year to opt-out of specified premises classification.
Key Dates and Deadlines
- Declaration Filing for Existing Registrants: File Annexure VII between 1st January and 31st March of the preceding financial year.
- Declaration Filing for New Registrants: File Annexure VIII within 15 days of GST registration acknowledgment.
- Opt-Out Filing Deadline: File Annexure IX during 1st January–31st March of the preceding financial year.
Impact and Benefits
- Simplified taxation with 18% GST and ITC for restaurant services in qualifying hotels.
- Clear redefinition of “specified premises,” improving compliance clarity.
- Flexibility for entities to opt in or out of the specified premises category through timely declarations.
#gstnewupdate #gstonhotelsandrestaurants #gstupdate CGST Notification 5/2025 (16.01.2025)