What is OTA commission and how does it work?
OTA (Online Travel Agency) commission is a percentage fee charged by platforms like MakeMyTrip, Booking.com, and Goibibo for each booking they generate. Typically ranging from 15-25%, this commission is deducted from your room rate before settlement.
Why is there GST on commission (18%)?
OTA services are classified as intermediary services under GST law, attracting 18% GST. This GST is charged on the commission amount, not on your room rate. For example, if commission is ₹630 (21% of ₹3,000), GST on commission would be ₹113.40 (18% of ₹630).
What is TDS and TCS on hotel bookings?
TDS (0.1%): Under Section 194-O, e-commerce operators must deduct TDS on gross sales.
TCS (0.5%): Under Section 206C(1H), sellers must collect TCS. Both are adjustable against your income tax.
When is GST 5% vs 18% on room tariff?
GST on hotel rooms depends on the declared tariff:
• 5% GST: Room tariff up to ₹7,500/night
• 18% GST: Room tariff above ₹7,500/night
How can I reduce OTA commission impact?
Key strategies: Build direct booking website, offer best-rate guarantee for direct bookings, collect guest emails for remarketing, train front desk to convert walk-ins, and partner with local corporates.
Is commission on base rate or total amount?
OTA commission is typically calculated on the base room rate (before GST). The guest pays room rate + GST, but commission is charged only on the room rate portion.