GST- Notification reg. Reverse Charge Mechanism (Defer till 30th September, 2019)
7th August, 2018
Sub: GST- Notification reg. Reverse Charge Mechanism (Defer till 30th September, 2019)
This is further to our circular dated 28th July, 2018 with regard to GST Council Meeting held on 21st July, 2018 with regard to defer the Reverse Charge Mechanism till 30th September, 2019.
In this regard attached please find a copy of Notification dated 6th August, 2018 issued by Ministry of Finance, Govt. of India.
28th July 2018
Sub: GST KEY CHANGES AS PER THE RECOMMENDATIONS OF 28TH GST COUNCIL MEETING HELD ON 21.07.2018
As you are aware, IATO has been vigorously following up by writing to the Hon’ble Finance Minister; Finance Ministers of various states who are members of GST Council; Secretary (Revenue); Joint Secretary, Tax Research Unit, Ministry of Finance; and all other concerned in the Ministry of Finance, Government of India expressing our concern of higher GST percentage and cascading affect of GST on tourism industry. One of the reason of high taxes is applicability of GST on the Declared Tariff of the hotel rooms and no input tax credit to tour operators. In our representations, we have been requesting that GST on hotel room should be charged on the actual billing amount and not on the declared tariff. Besides, we have requested to abolish Reverse Charge Mechanism.
You will be glad to know and must have read in the newspapers and electronic media that during the GST Council meeting held on 21st July 2018, following decisions were taken:-
i) To defer the Reverse Charge Mechanism under till 30th September 2019. Notification is awaited.
ii) Hotel rate of tax on accommodation service shall be based on transaction value (Value of Supply) instead of Declared Tariff. This has been notified vide Notification No. 14/2018 dated 26th July, and is applicable from 27th July 2018. (Copy enclosed).
However, with regard to para ii) above, due to change in hotel tax rate w.e.f. 27th July 2018, kindly check with the hotels in respect of advances paid before 27th July 2018 for the future files on the higher rate, as the case may be. Please note higher GST paid in advance for future bookings can be adjusted in future GST payment to Govt.
We shall keep you update with further developments from time to time.
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