The 55th GST Council Meeting brings major positive changes to GST rates in order to boost the hospitality industry.
Aimed to refine India’s indirect tax framework, the 55th Goods and Services Tax (GST) Council meeting took place in Jaisalmer, Rajasthan on December 21, 2024. Chaired by the Union Finance Minister Nirmala Sitharaman, the meeting proposed several changes and transformative additions to the applicability of GST in the service sector.
The hospitality sector saw one significant change in the GST rate as the definition of “declared tariff” has been officially omitted. Instead, the definition of “specified premises” has been recalibrated, linking it with the actual value of supply. According to the reformation, if the value of supply for hotel accommodation exceeds Rs 7500 in the preceding financial year, a rate of 18% GST with Input Tax Credit (ITC) shall be applicable.
For a value of supply below Rs 7500, it will attract a GST at 5% without ITC. Hotels can choose to pay 18% GST with ITC regardless of the value of supply by submitting a declaration at the beginning of the financial year. These changes will be effective from April 1, 2025.
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The GST Council has shown a determined effort to streamline compliance and align taxation with industry standards. The hospitality industry is sure to gain from these reforms, which promote fairness and support public welfare.
