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All India Resort Development Association
Industry Awareness Feature
About the Author: Spudarjunan Seetharaman is a Chartered Accountant and Partner at H N A & Co. LLP, currently heading the firm’s Kochi branch. With core expertise in GST, Foreign Trade Policy (FTP), and customs, he brings practical experience from implementing UAE VAT across sectors, including hospitality, construction, and manufacturing.
He has contributed to several publications, including Beneficial Schemes under FTP 2015–20 (Hiregange Academy), Handbook on GST Audit (KSCAA), and GST on Textile Industries. He is also co-author of Compendium of Issues and Solutions on GST, published by Bharat Law House in collaboration with Tax Sutra.
Spudarjunan believes in doing one’s duty with diligence—without attachment to outcomes.
A practical guide to recent updates, framed for clarity and compliance
The 56th GST Council meeting introduced a series of changes under GST 2.0, effective from 22nd September 2025. These updates impact accommodation, restaurant services, wellness offerings, and bundled hospitality experiences. While the reforms aim to reduce tax outflow for guests, they also require resorts and tourism operators to revisit pricing, input tax credit (ITC) strategy, and internal systems.
This Q&A summary highlights key changes relevant to resort owners—without commentary on policy decisions—focusing instead on practical implications and compliance clarity.
Accommodation Services
Q: What is the revised GST rate for hotel rooms?
Q: What does “without ITC” mean for resorts? It means resorts cannot claim credit for GST paid on inputs, services, or capital goods used for rooms priced ≤ ₹7,500/day. This may affect pricing and profitability.
Q: Are rooms below ₹1,000/day treated differently? No. Since July 2022, rooms priced ≤ ₹1,000/day are taxed at 5% without ITC—same as rooms up to ₹7,500/day.
Q: Do resorts need to reverse ITC for rooms taxed at 5%? Yes. These rooms are treated as exempt supplies for ITC purposes. Resorts must proportionately reverse ITC using Rule 42/43 of CGST Rules.
Restaurant Services
Q: Has the GST rate for restaurants changed? No change in base rates. However, only restaurants in specified premises can charge 18% with ITC. Others must charge 5% without ITC.
Q: What qualifies as a “specified premise”? A property qualifies if:
Q: What if a restaurant operates in a specified premise but serves guests in rooms ≤ ₹7,500/day? The restaurant can still charge 18% with ITC, provided the property qualifies as specified.
Bundled Services and Packages
Q: How is GST applied to room + breakfast packages? If bundled, the principal supply determines the GST rate. Typically, accommodation is dominant, so the room’s GST rate applies to the entire bundle.
Q: What about banquet services or hall rentals?
Wellness Services
Q: What is the GST rate for spa, beauty, and gym services? Now taxed at 5% without ITC, even within specified hotel premises.
Hostels and PG Accommodations
Q: Are hostels or PGs affected by GST 2.0? No major change. Exemption continues if:
Operational Implications
Q: What should resort owners do to stay compliant?
Q: Are bookings made before 22nd Sept affected?
Yes. GST rate depends on time-of-supply rules. If two out of three of the following components, i.e., (1) Date of invoice, (2) Date of receipt of payment, and (3) Date of provision of service, fall post-22nd Sept, new rates will apply. Useful to note that the rate of tax for the transitional period will be dependent, based on Section 14.
Please Note: These changes do not affect liquor, tobacco, or tour operator services directly. However, resorts may see cost shifts in bundled offerings and transport services. The key is proactive alignment—ensuring that pricing, invoicing, and ITC tracking reflect the new framework.
The author encourages resort owners to consult with qualified tax professionals and stay informed through official channels for revisions and periodic updates. This summary is intended to serve only as a topical update, not an advisory.
https://hnallp.com/
H N A & Co LLP, founded in 1988 by CA Madhukar N Hiregange in Bengaluru, has evolved into a trusted name in India's indirect taxation landscape, offering value-added services in consulting, audits, compliance, and representation across GST, Central Excise, Service Tax, Customs, and Foreign Trade Policy. With 35+ years of expertise and a pan-India presence (15+ offices including Bengaluru, Kochi, Hyderabad, Mumbai, and Chennai), the firm leverages deep industry knowledge and updated tax insights to deliver excellence. Renowned for client-centric, value-driven solutions, H N A & Co LLP's partners co-author 19+ books on indirect taxes, contribute to industry journals, teach at leading institutions, mentor peer firms, and actively advocate for simpler, transparent tax laws in India.
A more detailed version by the author is available here.
About AIRDA
AIRDA is an independent industry-focused body dedicated to timeshare and vacation ownership in India. Our primary members are resort owners who benefit from AIRDA’s constructive sharing of ideas and strategies on the running and promotion of vacation ownership and mixed-use platforms.
AIRDA also represents the industry within government circles—on policy issues that could benefit resort owners, nearby communities, and customers. Essentially, we hold a mirror at decision-making levels to help visualize an organized sector in India’s timeshare and vacation ownership space.
Our member resorts are located across the country in destinations that span India’s rich and diverse travel landscape—from beachside retreats and wildlife reserves to mountain getaways, spiritual hubs, and adventure tourism hotspots. This geographic spread allows AIRDA to support a wide spectrum of travel experiences while promoting sustainable and community-conscious tourism.
USEFUL LINKS
AIRDA WebsiteImages used in this article are for illustrative purposes only and do not constitute an endorsement of any specific products or services from our partners or affiliates. Image credits: Profile Image: Spudarjunan Seetharaman. Other images: Sourced from our freepik.com paid account.
Virtual ToursWelcome to AIRDA's virtual tours gallery - an initiative to provide an enhanced visual experience of our member properties.
MembershipWhat does an AIRDA membership mean to resort owners and developers? AIRDA comes in as your industry partner, conscience keeper and business catalyst - with a wide portfolio of support services.
What does AIRDA mean to holiday seekers and prospective customers? AIRDA comes in to provide information and offer guidelines on making the right timeshare decisions.
