Unveiling Special Provisions In Tax: In Accommodation Services

MCQ SELF CHALLENGE # 0071 ON SPECIAL PROVISIONS RELATING TO TAX RATE IN CASE OF ACCOMMODATION SERVICES

Special Provisions relating to Tax Rate in case of Accommodation Services

Dear Professional Seniors & Friends,

Warm Greeting!

Here is the Next post of #MCQ on concept-based practical professional knowledge on special provisions relating to the rate of tax in case of accommodation services in a unique manner to be self-answered by participants. The detailed answers to these MCQs shall be posted the next day for the self-assessment of the participants.

MCQ 71.1: On the 1st of July B provided accommodation service to C for a declared tariff of Rs 1200 but gave a discount of Rs 300 and the value of supply was Rs 900. Which among the following is correct about the rate of tax?

A) Nil.

B) 1296

C) 18%

D) 28%

MCQ 71.2: What if in the above question, 8 provides accommodation services to C on the 28th of July 2018?

A) NIL

B) 1296

C) 18%

D) 28%

Answer MCQ Self Challenge # 0071

This post of MCQ is on amendment on provisions in the GST act which is giving effect to the changes in the rate of tax in the case of accommodation services.

Answer to MCQ 71.1: B) 1296.

Answer to MCQ 71.2: A) NIL

Practical Analysis for MCQ 71.1& 71.2:-

• As per notification no. 11/2017 central tax rate dated 28th June 2017 as amended by various notifications thereafter, the rate of tax for accommodation services would be as follows-

Declared Tariff Rate of Tax

1000 to 2499 12%

2500 to 7499 18%

7500 and above 28%

• Also, accommodation services having declared tariff less than Rs 1000 are exempted through Notification No 12/2017 central tax rate dated 28th June 2017.
• But the government vide Notification No. 13/2018 dated 26th July 2018 has brought an amendment in Notification No. 11/2017 to provide that the word declared tariff wherever occurred be substituted with the word "value of supply".
• A similar change has been brought by Notification 14/2018 to amend Notification 12/2017 to substitute the word declared tariff with the word "value of supply".
• These amendments are effective from the 27th of July 2018.
• The above amendments provide a major relief to the hotel industry wherein the rate of tax on accommodation services shall be based on transaction value instead of declared tariff.
• Based on the above analysis, the correct answer is MCQ 71.1: B) 12%.
• Correct answer MCQ 71.2: A)

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as a professional opinion: you can definitely have your own opinion.)

Sincere Regards!

CA Sanjay Kumar Agrawal

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