GST rate cut on hotel room tariffs: Key takeaways and announcements

Source: Finance ministry
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. 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. GST has been exempted on specified defence goods not manufactured in India. GST rate has been hiked on railway wagon, coaches from 5% to 12%.

Key takeaways from GST Council meet:

  • GST on railway wagons, coaches increased to 12% from 5%
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  • GST rate hiked on caffeinated drinks to 28% from 18%
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  • Caffeinated drinks to attract 12% GST compensation cess
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  • Uniform rate of 12% for woven/non-woven polyethylene bags
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  • Compensation cess on petrol vehicles with 10-13 person capacity reduced to 1%
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  • Compensation cess on diesel vehicles with 10-13 person capacity reduced to 3%
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  • Nil GST on hotel with tariffs up to Rs 1000 
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  • GST rate on hotel tariffs from Rs 1000-Rs 7500 fixed at 12%
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  • 12% cess on 1,500 cc diesel, 1,200 cc petrol vehicles with capacity to carry up to 13
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  • All rate changes will be effective from October 1 2019