Rate-Based Tax - October 1st Changes and How to Manage the New Tax Slabs

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Starting October 1st, 2019, the tax slabs in India are going to change as shown below:

  • (Default/1st rule) 0% (no tax applied) if the room rate is less than INR 1000,00 (the 2nd rule)
  • (2nd rule) 12% (from nightly room rate) if the room rate equals INR 1001,00 or is higher than INR 1001,00 but is less than INR 7500,00 (the 3rd rule)
  • (3rd rule) 18% (from nightly room rate) if the room rate equals INR 7501,00 or is higher than INR 7501,00

All reservations before October 1st, 2019 must have the old taxes, but the nightly rates as of October 1st will be on the new tax slab.

How to set up Rate-Based Tax in myfrontdesk

Please check this article from our knowledge base to learn How to Setup Rate-Based Tax in myfrontdesk

How to fix my existing taxes to apply the new taxes slabs?

Please proceed with the steps below only after your nightly charged/posted transactions on October 1st, 2019.

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The new tax slabs will be applied on October 1st, 2019 on the Hospitality Industry. In order to update your existing taxes, please follow the steps below:

  1. Click on Manage on the top right corner
  2. Access 'Taxes and Fees' tab
  3. Click to edit the corresponding tax

4.     Please adjust your taxes according to the new tax slabs.

  • (Default/1st rule) 0% (no tax applied) if the room rate is less than INR 1000,00 (the 2nd rule)
  • (2nd rule) 12% (from nightly room rate) if the room rate equals INR 1001,00 or is higher than INR 1001,00 but is less than INR 7500,00 (the 3rd rule)
  • (3rd rule) 18% (from nightly room rate) if the room rate equals INR 7501,00 or is higher than INR 7501,00

Carefully read the warning message saying that this change will only apply to new, future reservations. It will not apply to all the transactions and reservations that already exist within the system.

5.   Click YES to proceed.

Now the system will recalculate your new future reservations.

What if I fix my tax settings only after October 1st?

The system will re-calculate the taxes from the date of the change and will fix the taxes only for new future reservations/transactions.

If you are adjusting your taxes after October 1st, please note that Cloudbeds is unable to recalculate the taxes on reservations in the past. You'll need to go back and manually adjust all the days in the reservations that were in-house after October 1st.

Please follow the instructions on this article to learn How to Adjust Charge / Add Adjustment to a Reservation

What happens with In-House reservations?

If you applied the changes on October 1st

All future transactions/nightly rates will be fixed automatically by the system if you followed the steps above correctly.

If you applied the changes after October 1st

Nightly rates posted after October 1st will need to be adjusted manually by following these instructions How to Adjust Charge / Add Adjustment to a Reservation

Remember that all reservations before October 1st, 2019 must have the old taxes, but the nightly rates as of October 1st will be on the new tax slab.

Have more questions? Contact Support

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