The Central Budget for the F. Y. 2016 has been presented in the Parliament on 29-02-2016 and the Rajasthan State Budget for F. Y. 2016 has been presented in the Vidhan Sabha on 08-03-2016.
Accordingly, there are certain changes proposed in the Rates of various Taxes applicable on Hotels and Restaurants in Rajasthan. We are summarizing the proposed Tax Rates applicable on Hotels and Restaurants in Rajasthan under the (I) SERVICE TAX; (II) VAT; (III) LUXURY TAX; & (IV) Rate of TDS on Works Contract Awarded.
(I) SERVICE TAX:-
The budget for the F.Y. 2016-17 has been presented by the H’ble Finance Minister, Sh. Arun Jaitely Ji on 29th February, 2016.
There is no change in the base rate of Service Tax i.e. 14% and Swachh Bharat Cess (SBC) i.e. 0.50%. However, a new cess is introduce as– Krishi Kalyan Cess (KKC) @ 0.50% in the Finance Bill, 2016 which has been made applicable w.e.f. 01-06-2016.
Due to the applicability of a new cess w.e.f. 01-06-2016, there will be two Service Tax Rate’s applicable during the F. Y. 2016-17. We are noting below the applicable rate’s on different categories of services in a Hotel, Restaurant and other Hospitality Segment as below:-
A) For the period from 01-04-2016 to 31-05-2016:-
- Service Tax – 14% on Taxable (Abated) Value; and
- SBC – 0.50% on Taxable (Abated) Value
Total S. T. Liability- 14.50%
B) For the period From 01-06-2016 to 31-03-2017
- Service Tax – 14% on Taxable (Abated) Value; and
- SBC – 0.50% on Taxable (Abated) Value
- KKC – 0.50% on Taxable (Abated) Value
Total S.T. Liability – 15%
[NOTE – (a) Input CENVAT Credit of Swach Bharat Cess cannot be availed; however (b) Input CENVAT Credit of Krishi Kalyan Cess will be available for payment of Krishi Kalyan Cess only.]
(A) Service Tax Rate applicable from 01.04.2016 to 31.05.2016
| S.
No. |
Name of Taxable Service | Date from Which Service Tax is Applicable | From 01-04-2016 to 31-05-2016 | |||||
| Without Abatement | With Abatement | |||||||
| Service Tax | Swachh Bharat Cess | Total | Service Tax | Swachh Bharat Cess | Total | |||
| 1. | Renting of Rooms | 01-05-2011 | 14 % | 0.5 % | 14.5 % | 8.4 % | 0.3 % | 8.7 % |
| 2. | Serving Food & Beverages in Air Conditioned Restaurant : Pre-Condition of License to serve alcohol has been withdrawn w.e.f. 10-05-2013 | 01-05-2011 | 5.6 % | 0.2 % | 5.8 % | – | – | – |
| 3. | Outdoor Catering Service | 10-09-2004 | 8.4 % | 0.3 % | 8.7 % | – | – | – |
| 4. | Renting of Immovable Property | 01-06-2007 | 14 % | 0.5 % | 14.5 % | – | – | – |
| 5. | Mandap Keeper Service :
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 |
01-07-1997 | 14 % | 0.5 % | 14.5 % | 9.8 % | 0.35 % | 10.15% |
| 6. | Beauty Parlour & Spa Services | 16-08-2002 | 14 % | 0.5 % | 14.5 % | – | – | – |
| 7. | Renting of Motor Vehicles | 01-04-2000
|
14 % | 0.5 % | 14.5 % | 5.6 % | 0.2 % | 5.8 % |
| 8. | Tour Operator Service | 01-07-2000 | ||||||
| (a) | Packaged Tour [Ommited] | 14 % | 0.5 % | 14.5 % | 3.5 % | 0.125% | 3.625% | |
| (i) | A tour, only for the purpose of arranging or booking Accommodation for any person | 14 % | 0.5 % | 14.5 % | 1.4 % | 0.05 % | 1.45 % | |
| (ii) | Tours other than (i) above | 14 % | 0.5 % | 14.5 % | 4.2 % | 0.15 % | 4.35 % | |
(B) Service Tax Rate applicable from 01.06.2016 to 31.03.2017
| S.
No. |
Name of Taxable Service | Date from Which Service Tax is Applicable | From 01-06-2016 to 31-03-2017 | |||||||
| Without Abatement | With Abatement | |||||||||
| Service Tax | Swachh Bharat Cess | Krishi Kalyan Cess | Total | Service Tax | Swachh Bharat Cess | Krishi Kalyan Cess | Total | |||
| 1. | Renting of Rooms | 01-05-2011 | 14 % | 0.5 % | 0.5 % | 15 % | 8.4 % | 0.3 % | 0.3 % | 9 % |
| 2. | Serving Food & Beverages in Air Conditioned Restaurant : Pre-Condition of License to serve alcohol has been withdrawn w.e.f. 10-05-2013 | 01-05-2011 | 5.6 % | 0.2 % | 0.2 % | 6 % | – | – | – | – |
| 3. | Outdoor Catering Service | 10-09-2004 | 8.4 % | 0.3 % | 0.3 % | 9 % | – | – | – | – |
| 4. | Renting of Immovable Property | 01-06-2007 | 14 % | 0.5 % | 0.5 % | 15 % | – | – | – | – |
| 5. | Mandap Keeper Service :
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 |
01-07-1997 | 14 % | 0.5 % | 0.5 % | 15 % | 9.8 % | 0.35 % | 0.35 % | 10.5 % |
| 6. | Beauty Parlour & Spa Services | 16-08-2002 | 14 % | 0.5 % | 0.5 % | 15 % | – | – | – | – |
| 7. | Renting of Motor Vehicles | 01-04-2000
|
14 % | 0.5 % | 0.5 % | 15 % | 5.6 % | 0.2 % | 0.2 % | 6 % |
| 8. | Tour Operator Service | 01-07-2000 | ||||||||
| (a) | Packaged Tour [Ommited] | 14 % | 0.5 % | 0.5 % | 15 % | 3.5 % | 0.125% | 0.125% | 3.75 % | |
| (i) | A tour, only for the purpose of arranging or booking Accommodation for any person | 14 % | 0.5 % | 0.5 % | 15 % | 1.4 % | 0.05 % | 0.05 % | 1.5 % | |
| (ii) | Tours other than (i) above | 14 % | 0.5 % | 0.5 % | 15 % | 4.2 % | 0.15 % | 0.15 % | 4.5 % | |
(C) Service Tax Reverse Charge – The Rate of Service Tax Reverse Charge along with applicability are enclosed as Annexure – 1 for ready reference.
(II) Rajasthan Value Added Tax – The government has changed the Rate of VAT before the budgets from 5% to 5.50% vide Notification No. F. 12 (42)FD/Tax/2010-123 dated 01-02-2016 effective from 02-02-2016. In the current Rajasthan Budget, 2016 presented in the Vidhan Sabha on 08-03-2016 there is only one change i.e. in respect of Aerated Water from 15% to 20% with immediate effect from 08-03-2016. We are noting below the rates of VAT for various items in different categories of Hotels for ready reference:-
| S.
No. |
Name of Product | RATE OF VAT | |
| Old Rates | New Rates | ||
| 1. | (i) Cooked Food in a Heritage (Categorised as Classic & Grand by GOI), 3 star and above category, or categorised equivalent to the categories mentioned above by a committee constituted for this purpose by state government.
(ii) Ice-candy, ice-cake, ice cream, ice-jelly, frozen dessert, kulfi, Ice cream cone. (iii) Chocolates and other food preparations containing cocoa. (iv) Branded bakery products including all varieties of cookies, pastries, patties, biscuits, cake sold under brand name registered or applied for under the Trade Marks Act, 1999. (v) Cooked food like Pizza, burgers, fried chicken, French fries, sandwich, hot dog, noodles, potato chips, bakery items and any other cooked food items served and sold including home delivery thereof under a brand name by any branded chain outlet of cooked food. (vi) Beverages including coffee drinks hot and cold, Instant coffee, espresso coffee, flavored/ non flavored tea, Ice tea, milk shakes, thick shakes, Ice-cream shakes, flavored milk, fruit pulp drinks, squash(excluding beverages specifically mentioned in any other Schedule) (vii) Corn flakes, wheat flakes, kurkure, popcorn and such articles. (viii) Chips when sold under brand name registered or applied for under Trade Mark Act, 1999. (ix) Branded confectionery including toffee, chocolate, chewing gum, bubble gum and the frozen confectionery, sugar candy having less than 90% sugar contents and likewise sold under brand name registered or applied for under the Trade Marks Act, 1999. (x) Oat meal, custard powder, concentrate of drinks and food, baking powder, milk food for babies, ice cream powder, instant soups, noodles , pastas, vada mix, dosa mix, Idli mix, gulab jamun mix, Ice cream mix and softy mix, manchurian mix, jaljeera mix, chocolate sauce and other Chinese eatable mix and tinned or packed ready to eat items. (xi) Cocoa paste and cocoa powder. (xii) Vinegar of all types. (xiii) Margarine, table margarine, vegetable bakery margarine, mayonnaise, salad dressing, bread improver, cake gel, edible gelatin, fruit oils likegrape oil, orange oil, lemon oil, lime oil, carrot oil, leaves oil such as mint oil, curry leaf oil. (xiv) Tomato puree, ketchup, sauces in all form and varieties. (xv) Health drinks of all varieties and other nonalcoholic beverages not falling under any entry in any other Schedule. (xvi) Food supplements, appetizers in liquid, pill or powder forms, whether prepared according to pharmacopeia standards or otherwise. (xvii)Veg / non veg snacks including potato flakes, hara bhara Kabab, shammi kabab, cheese roll, burger, aloo tikki, soya roll. (xvii)All types of baby food supplements. (xix) *** [Soya Milk has been removed from this list in this budget]
|
14.50%
Unbranded items at S. No. 1 (v) will be taxed in accordance with the applicable rate of cooked food in respective category of the hotel/ restaurant instead of peak rate. |
14.50%
[NO CHANGE]
Unbranded items at S. No. 1 (v) will be taxed in accordance with the applicable rate of cooked food in respective category of the hotel/ restaurant instead of peak rate. |
| 2. | Cooked Food except when sold in a restaurant or Heritage (Categorised as Classic & Grand by GOI), 3 star and above category, or categorised equivalent to the categories mentioned above by a committee constituted for this purpose by state government | 5.50% | 5.50% |
| 3. | Aerated Drinks | 15% | 20% [Applicable w.e.f. 08.03.2016] |
| 4. | Alcoholic Beverages | 20% | 20% |
| 5. | Tobacco Products | Taxable at First Point of Sale @ 65% | Taxable at First Point of Sale @ 65% |
| 6. | Handicraft Items | Exempted | Exempted |
| a) | Having Sale Price above Rs. 1000/- | 5.50% | 5.50% |
| b) | Others | 0% | 0% |
| 7. | Gold & Silver Jewellery and Gem Stones | 1% | 1% |
| 8. | Books | 0% | 0% |
(III) LUXURY TAX
| S. No. | CLASS OF HOTELS | NORMAL RATE OF LUXURIES | RATE OF TAX | |
| Season
(Aug-April) |
Off-Season
(May-July) |
|||
| 1. | All Heritage hotels other than hotels categorized in the “Grand” category by Government of India or categorized as equivalent to “Grand” category by a Committee constituted for the purpose by the State Government | Rs. 3001/- or more per day or part thereof | 8% | 0% |
| 2. | All hotels other than those mentioned at serial number 1 above | Rs. 3,001/- or more but upto Rs. 10,000/-per day or part thereof. | 10% | 0% |
| Rs. 10,001/- or more per day or part thereof [w.e.f. 01-04-2016] | 12% | 0% | ||
NOTE : For Notified Area of Mount Abu the off-season is from Jan-Mar.
(IV) Rate of TDS on Works Contract
| S. No. | Type of Contractor/ Condition | Rate of TDS under Works Contract |
| 1. | A Dealer registered under the Rajasthan VAT Act, 2003 | 3% [w.e.f. 01-04-2016] |
| 2. | Unregistered Dealer not covered under 1 above | 7% |
| 3. | Where Exemption Certificate is provided by the Contractor | Rate prescribed in the EC |
ANNEXURE
LIABILITY OF SERVICE TAX UNDER REVERSE CHARGE MECHANISM
(Applicable for F. Y. 2016-17)
We are noting below the Frequently Asked Questions (FAQs) related to Liability of Service Tax in India under the Reverse Charge Mechanism under Section 66B of the Finance Act, 1994:-
FAQ 1 : Who is Liable to charge Service Tax under Reverse Charge Mechanism?
Reply : Notification No. 30/2012 has provided the category of person who are liable to pay Service Tax under the Reverse Charge Mechanism based on the Nature of Service as noted as below:-
| S. No. | Nature of Service | Person Liable to Pay |
| 1. | ü Taxable Service received from person located in Non Taxable Territory.
ü GTA by Road |
By Recipient being Any Person
By Specified Person for GTA |
| 2. | ü An Arbitral Tribunal;
ü An individual advocate or a Firm of Advocates (other than Senior Advocate); ü Services provided or agreed to be provided by Government or Local Authority (1) Renting of immovable property and (2) services specified in sub-clause (i), (ii) and (iii) of clause (a) of section 66 D |
By Recipient being a Business Entity |
| 3. | ü Sponsorship Service | By Recipient being a Body Corporate or Partnership Firm |
| 4. | ü Renting of Motor Vehicle for carrying of passengers, to any person not engaged in similar line of business;
ü Supply of Manpower; ü Security Services; ü Works Contract Service; |
By Recipient being a Body Corporate
Condition:- Service Provider being an Individual, HUF, Partnership Firm, AOP located in taxable territory |
| 5. | ü By the Director of Company | By Recipient being a Body Corporate |
| 6. | ü Insurance Agent;
ü Recovery Agent of Bank/ NBFC; ü S&M agent of Lottery Tickets |
By the Recipient of Service |
| 7. | ü Aggregator Service | By Aggregator, or his representative or his agent |
FAQ 2 : What are the Rate of charging Service Tax under Reverse Charge Mechanism, payable by the Recipient of Service for F. Y. 2016-17?
Reply : The rate’s of Service Tax to be charged by the recipient of Service under the Reverse Charge Mechanism for F. Y. 2016-17 are as below:-
| Sl. No. | Description of a service | 01.04.2016 to 31.05.2016 | 01.06.2016 to 31.03.2017 |
| 1 | By an insurance agent to any person carrying on insurance business (100%) | 14.5 % | 15 % |
| 1A | By a recovery agent to a banking company or a Financial Institution or a non-banking Financial Company | 14.5 % | 15 % |
| 1B | By Mutual Fund agent or Distributor of Mutual Fund or AMC (w.e.f. 01-04-2016) (100%) – Omitted vide Notification No. 18/2016-ST dated 01-03-2016 | 14.5% | 15 % |
| 1C | By selling or marketing agent of Lottery Tickets in relation to lottery in any manner to a Lottery Distributor or Selling Agent of the State Government under the provisions of the Lottery (Regulations) Act, 1998 (w.e.f. 01-04-2015) (100%) | 14.5% | 15 % |
| 2 | By a goods transport agency in respect of transportation of goods by road (100%) | 14.5 % | 15 % |
| 3 | By way of sponsorship (100%) | 14.5 % | 15 % |
| 4 | By an arbitral tribunal (100%) | 14.5 % | 15 % |
| 5 | By firm of advocates or an individual advocate other than a senior advocate by way of legal services (100%) | 14.5 % | 15 % |
| 5A | By a Director of a Company or a body corporate to the said company or the body corporate (100%) | 14.5% | 15 % |
| 6 | By Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994– (100%) | 14.5 % | 15 % |
| 7 | By way of renting of a motor vehicle designed to carry passengers, to any person who is not engaged in the similar line of business
i) On Non-Abated Value (Partial Reverse Charge upto 50%) ii) On Abated Value (100%) |
7.25 % 5.8 % |
7.5 % 6 % |
| 8 | By way of supply of manpower including Security Service for any purpose (100%) | 14.5 % | 15 %
|
| 9 | On Service portion in execution of works contract (Partial Reverse Charge upto 50%)
– In case of Original Work – Value of Service is 40% – In case of maintenance or repairs or reconditioning or restoration or servicing of any goods – Value of Service is 70% – In case of Other Works Contract – Value of Service is 70% |
2.9 % 5.075 %
5.075 % |
3 % 5.25 %
5.25 % |
| 10 | By any person who is located in a non-taxable territory and received by any person located in the taxable territory (100%) | 14.5 % | 15 % |
| 11 | In respect of services provided or agreed to be provided by an Aggregator defined in Rule 2 (aa) of the Service Tax Rules (w.e.f. 01-03-2015)
Liability of Reverse Tax on Aggregator of Service or his representative. (100%) |
14.5% | 15 % |