Essential Hotel and OTA Terms

Essential Hotel and OTA Terms

Gross Booking Value (GBV)

The total amount paid by the guest for a booking, including the room rate and all applicable taxes before any deductions. This is the starting point for all reconciliation.

OTA Commission

The fee charged by Online Travel Agencies (OTAs) like MakeMyTrip or Goibibo for facilitating a booking. This is typically a percentage of the room rate and is deducted from the gross amount.

GST (Goods and Services Tax)

An indirect tax levied on most goods and services in India. For hotels, GST rates vary based on the room tariff (e.g., 5% for rooms below ₹7,500 and 18% for rooms ₹7,500 and above).

Taxable Room Value

The base value of the room rate before GST is applied. This is often calculated by dividing the gross amount by (1 + GST Rate).

GST on Commission

In India, OTAs charge GST (typically 18%) on the commission they earn. This is an additional deduction from the hotelier's payout.

TCS (Tax Collected at Source) - Section 52

A provision under Indian GST law where e-commerce operators (like OTAs) are required to collect 0.5% of the net value of taxable supplies made through their platform. This is deposited with the government and can be claimed by the hotelier.

TDS (Tax Deducted at Source) - Section 194O

A provision under the Income Tax Act where e-commerce operators deduct 0.1% of the gross amount of sale of goods or provision of services. This is also deposited with the government and can be claimed by the hotelier in their Income Tax Return (ITR).

Net Bank Credit

The final amount that the hotelier receives in their bank account after all OTA commissions, GST on commission, TCS, and TDS deductions have been made from the Gross Booking Value.