SERVICE TAX ON HOTELS

The recent amendment in the Service Tax Act, 1993 impacting the Hotel Industry are enumerated as under:

The Room rents over Rs.1000/- will be subject to Service Tax of 5% post 50% abatement. The actual Service tax being 10% but the Hotels can avail 50% abatement in the Hotel room charges and 70% on restaurant bills even on those areas of restaurants also which are non-a/c e.g terrace restaurants which will be also covered since other restaurant in the hotel is a/c. Pl let me know if I have read it correct.

ISSUES.

1) The ST will be paid on the Gross Amount as stated in the amendment of Finance Act 2011. Will it therefore include:

i) Minibar

ii) Laundry

iii) Other Misc Charges.

iv) Travel Desk- in this case we seperately bill the customer and charge the Service Tax of 10% in the bill itself V) Telephone

2) The Restaurants bill will be subject to 3.09% Service tax will it also include the room service. it seems it will.

ISSUES

i) THE Banquet bills are already subjected to 10.30% tax. Will they be subject to 3.09% additional ST. ii) Is it allowed to avail cenvat credit in one service and abatement in another.

iii) In case if a Co has two Hotel as units can assessee file retun, pay tax and get assessment done at its Reg Off. under centralised registration.

iv) In case if a Co has two Hotel as units can it utilise CENVAT credit of one unit for another.

v) Further if the Hotel is in expansion mode will it be benefial to utilise CENVAT Credit and not take the depreciation.