By ASaiprasad BCom LLB ACA DISA AMIMA Advocate Meaning of Hospitality Hospitality is the relationship between the guest and the host or The act or practice of being hospitable ID: 775794
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Service Tax on Hospitality Industry
By:
A.Saiprasad
B.Com, LLB, ACA, DISA, AMIMA
Advocate
Slide2Meaning of Hospitality
Hospitality is the relationship between the guest and the host, or The act or practice of being hospitable. This includes the reception and entertainment of guests, visitors, or strangers.
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Slide3Guest is God
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Slide4Industries Covered
Hotel IndustryRestaurant IndustryTravel IndustryTourism IndustryTravel AgentsMandap KeepersConvention Centres/ Banquet HallsHealth & GymnasiumClub and Association Service
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Slide5Hotel Industry - Boarding
Prior to 1.7.12Short Term AccommodationSection 65(105)(zzzzw) Service by a hotel, inn, guest house, club or campsite, for providing of accommodation for a continuous period of less than three months;]
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Slide6Hotel Industry - Boarding
Post 1.7.12Definition of Service – S.65B(44)Declared Service(a) Renting of immovable property
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Slide7Hotel Industry - Boarding
S. 65B (41) “renting” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property
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Slide8Hotel Industry - Boarding
Exemption
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Period
Exemption
Conditions
Notification No.
Prior
to 1.7.12
Fully
Exempted
Declared Tariff < Rs.
1,000/- per day
31/2011
ST dt.25.4.11
Post
1.7.12
Fully Exempted
Declared Tariff < Rs.
1,000/- per day
25/2012 ST
dt.20.6.12
Slide9Declared Tariff - Meaning
”declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air-conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit2(n) of Notification No.25/12 ST
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Slide10Hotel Industry - Boarding
Abatement
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Period
Abatement
Conditions
Notification No.
Prior
to 1.7.12
50%
No Cenvat Credit
34/2011
ST dt.25.4.11
Post
1.7.12
40%
Cenvat Credit only on
input services allowed
26/2012 ST
dt.20.6.12
Slide11Restaurant Industry
State of Punjab V. M/s. Associated Hotels of India, [1972] 2 SCR 937Northern India Caterers V. Lt. Governor Of Delhi, [1979] 1 SCR 55761st Law Commission of India ReportArticle 366(29A)(f)
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Slide12Restaurant Industry
Definition of Service – S.65B(44)Exclusions – Clause (a), Sub Clause (ii)TDS of Article 366(29A)(f)a tax on the supply, by way of or as a part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration.
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Slide13Restaurant Industry
Declared Service – Section 66E(i)Service portion in an activity Wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity
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Slide14Restaurant Industry
ValuationRule 2C of the Service Tax Valuation Rules, 2006 – Effective Rate
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Sl. No.
Description
Percentage of the total amount
(1)
(2)
(3)
1.
Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity,
at a restaurant
40
Slide15Out Door Catering Industry
ValuationRule 2C of the Service Tax Valuation Rules, 2006
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Sl. No.
Description
Percentage of the total amount
(1)
(2)
(3)
2.
Service portion in outdoor catering wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of such
outdoor catering
60
Slide16Restaurant Industry
ValuationRule 2C of the Service Tax Valuation Rules, 2006Explanation 1. - “total amount” = gross amount charged +FMV of all goods and services supplied - amount charged for such goods or services, if any - VAT Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles. Explanation 2. – No CENVAT credit of duties on input under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986 ).]
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Slide17Restaurant Industry
Exemption – RestaurantNotification No.25/12 ST dt.20.6.12Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having (i) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licence to serve alcoholic beveragesUpto 28.2.13
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Slide18Restaurant Industry
Exemption – RestaurantNotification No.25/12 ST dt.20.6.12Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year;From 1.3.13
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Slide19Restaurant Industry
BSNL V. UOI – 2006 (2) STR 161 (SC)Kerala Classified Hotels & Resorts Association V. UOI2013 (31) STR 257 (Ker.)M/s. Hotel East Park & Another V. UOI & Another2014-TIOL-758-HC-Chhattisgarh-STIndian Hotels & Restaurant Association V. UOI2014-TIOL-498-HC-MUM-ST
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Slide20Hotel & Restaurant Industry
Point of TaxationRule 3 of POTR r/w Rule 4A of STR, 94What about advances for marriage etc?Place of Provision of ServiceRule 5 of POPSSubject to Rule 8 r/w Rule 14 Reversal of Cenvat Credit if bothTaxable and Exempt services are providedComputation of threshold exemption limit?Should exempt services be included?Registration & PaymentCircular No.165/16/2012 ST dt.20.11.12
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Slide21Travel Industry
Taxability Prior to 1.7.12
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CategorySection No.ModeRent-a-Cab65(105)(o)RoadTour Operator Service65(105)(n)RoadTransportation of Passengers by Air65(105)(zzzo)AirTransportation of Passengers by Cruise Ship65(105)(zzzv)
Slide22Travel Industry
Taxability post 1.7.12Negative List – Section 66D(0)Following items fall under negative listservice of transportation of passengers, with or without accompanied belongings, by—(i) a stage carriage;(ii) railways in a class other than—(A) first class; or(B) an air-conditioned coach;(iii) metro, monorail or tramway;
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Slide23Travel Industry
Taxability post 1.7.12Negative List – Section 66D(0)Following items fall under negative listservice of transportation of passengers, with or without accompanied belongings, by—(iv) inland waterways;(v) public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and(vi) metered cabs, radio taxis or auto rickshaws;
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Slide24Travel Industry - Exemptions
Transport of passengers, with or without accompanied belongings, by -(a) air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal; (North Eastern States)(b) a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire; or(c) ropeway, cable car or aerial tramwayNotification No.25/12 ST, Entry No.23
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Slide25Travel Industry - Abatement
Mode of TravelAbatementConditionTransport of passengers, with or without accompanied belongings by Rail70Nil.Transport of passengers by air, with or without accompanied belongings60Only Input Service available as Cenvat CreditRenting of any motor vehicle designed to carry passengers40No Cenvat Credit
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Slide26Travel Industry – Reverse Charge
For Rent-a-Cab ServiceConditions for Reverse Charge
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Particulars
Service Provider
Service Receiver
Tax
payable on Abated Value
NIL
100%
Tax payable
on the Full Value
60%
40%
Slide27Travel Industry
Place of Provision of ServiceRule 11 – For Transportation ServiceThe place where the passenger embarks on the conveyance for a continuous journeyRule 12 – Provision of Services on Board a ConveyanceThe first scheduled point of departure of that conveyance for the journeyPoint of Taxation – Rule 3 r/w Rule 8
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Slide28Tour Operator Service
Prior to 1.7.12 - Tour Operator – S.65(115)Post 1.7.12 - Definition of Service – S.65B(44)Journey arranged by educational body not excluded“tour operator” means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours
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Slide29Tour Operator Service
Abatement
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Type
of Service
Abatement
Conditions
(i) Package Tour
75%
Bill inclusive
of charges for such tour
No Cenvat Credit
(ii) Services solely of arranging or booking accommodation in
relation to a tour
90%
Bill must include cost of accommodation
No Cenvat Credit
Services
other than (i) and (ii)
60%
Bill should be for gross
amount
No Cenvat Credit
Slide30Abatement - Convention Centre/ Mandap Keeper Service
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Type
of Service
Abatement
Conditions
Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention
centre,
club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises
30%
No
Credit on inputs falling under CETH 1 to 22
Slide31Bundled Service
A hotel provides a 4-D/3-N package with the facility of breakfast. Is this bundling in the ordinary course of business? What service?Hotel Crown is booked for a conference of 100 delegates on a lump sum package with the following facilities: Accommodation for the delegates Breakfast for the delegates, Tea and coffee during conference Access to fitness room for the delegates Availability of conference room Business CentreWhat service? How taxed?
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Slide32Questions
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Slide33Thank You
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