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GST for Hotels in India: Complete Guide

By Hotel Playbook Team 8 min read

GST Rates for Hotels (Effective 22 September 2025)

5% GST Declared room tariff up to ₹7,500 per night (no ITC)

18% GST Declared room tariff above ₹7,500 per night (ITC available)

Note: The 56th GST Council meeting capped rooms up to ₹7,500 at 5% without ITC, while premium rooms stay at 18% with ITC, keeping the slab tied to the declared tariff per unit per day.

GST Slabs for Hotel Accommodation

The 56th GST Council meeting (implemented on 22 September 2025) replaced the earlier 0%/12%/18% mix with a two-slab system that depends on the declared tariff per unit per day:

Declared Tariff (Per Night) GST Rate ITC Available
Up to ₹7,500 5% No
Above ₹7,500 18% Yes

Once the declared tariff crosses ₹7,500 for even one room, that room enters the 18% slab with ITC, while inventory priced at or below ₹7,500 must mandatorily charge 5% without ITC.

Important Update (22 September 2025): Rooms priced up to ₹7,500 moved to the 5% slab without ITC, while anything above ₹7,500 continues at 18% with full ITC benefits. Budget and mid-scale hotels should rework tariffs and packages to stay on the right side of the ₹7,500 threshold.

Declared Tariff vs Actual Selling Price

The GST slab is now locked to the declared room tariff per unit per day, even if you later discount the room for a guest. Use this quick reference:

Scenario What Decides GST
Direct booking with tariff ≤ ₹7,500 Charge 5% GST without ITC; keep tariff cards updated
Direct booking with tariff > ₹7,500 Charge 18% GST with ITC, even when you offer discounts
OTA booking (guest pays OTA) Match the declared tariff displayed on the OTA listing to pick the slab
Corporate contracted rate Refer to the declared tariff in the contract; document slab applicability
Practical Tip: A ₹6,000 room now carries ₹300 GST (5%), while an ₹8,000 room adds ₹1,440 GST (18%). Monitor the ₹7,500 threshold closely when revising tariffs or packages.

GST on Food & Beverages

Food, restaurant, and banquet services now follow the same specified vs non-specified logic: if any room in the hotel crossed ₹7,500 in the previous financial year (or the hotel voluntarily opts in), the premises are treated as specified and must charge 18% with ITC on F&B. Otherwise, the 5% rate without ITC continues.

Service GST Rate
Restaurant / F&B in non-specified premises (all rooms ≤ ₹7,500) 5% (without ITC)
Restaurant / F&B in specified premises (any room > ₹7,500) 18% (with ITC)
Room service / In-room dining Follow the same rate as the restaurant in that premises (5% or 18%)
Outdoor catering / banquets at non-specified premises 5% (without ITC)
Outdoor catering / banquets at specified premises 18% (with ITC)

Input Tax Credit (ITC) Rules

Hotels can claim ITC on GST paid for business expenses. Here's what's eligible:

ITC Eligible

  • Furniture, fixtures, equipment purchases
  • Linens, amenities, toiletries
  • Software and technology services
  • Professional services (legal, accounting)
  • Marketing and advertising expenses
  • Maintenance and repairs
  • Food ingredients (if charging 18% on F&B)

ITC Not Eligible

  • Food and beverages for staff consumption
  • Personal use items
  • Goods/services for exempt supplies
  • Motor vehicles (except for specific uses)
ITC Tip: Rooms and F&B taxed at 5% can no longer claim ITC, so track common expenses (power, housekeeping contracts, marketing) and reverse proportionate credits if you operate both 5% and 18% categories under Rule 42.

GST Invoice Requirements

Every GST invoice from your hotel must include:

  1. Hotel details: Name, address, GSTIN
  2. Invoice number: Unique, sequential
  3. Invoice date: Date of supply
  4. Guest details: Name, address, GSTIN (if B2B)
  5. HSN/SAC codes:
    • Accommodation: 9963
    • Restaurant: 9963
  6. Taxable value: Amount before GST
  7. GST breakup: CGST + SGST (intra-state) or IGST (inter-state)
  8. Total amount: Including GST
  9. Place of supply: State where hotel is located

Place of Supply Rules

Service Place of Supply Tax Type
Accommodation Location of hotel CGST + SGST
Restaurant services Location of hotel CGST + SGST
Banquet for local company Location of hotel CGST + SGST
Services to foreign tourist Location of hotel CGST + SGST
Note: Hotel services are always taxed where the hotel is located, regardless of where the guest is from. So it's always CGST + SGST, never IGST for accommodation.

GST Filing Requirements

Return Frequency Due Date
GSTR-1 (Outward supplies) Monthly 11th of next month
GSTR-3B (Summary return) Monthly 20th of next month
GSTR-9 (Annual return) Yearly 31st December

Common GST Mistakes by Hotels

  1. Wrong slab application: Charging 18% on sub-₹7,500 rooms (should be 5%) or forgetting to apply 18% on premium inventory
  2. Missing ITC claims: Not claiming eligible input credits
  3. Incorrect place of supply: Charging IGST instead of CGST+SGST
  4. Late filing: Missing return deadlines leading to penalties
  5. No HSN/SAC codes: Forgetting to mention service codes on invoices
  6. B2B invoice errors: Not capturing corporate guest GSTIN
  7. No ITC reversal: Ignoring Rule 42 calculations when running both 5% and 18% categories
Penalty Alert: Late filing of GSTR-3B attracts ₹50/day (₹20/day for nil returns) plus 18% interest on tax due.

GST on OTA Commissions

When OTAs charge commission, they charge 18% GST on that commission. As a hotel, you can claim ITC on this GST if you're registered.

Example:

  • Room booking value: ₹5,000
  • OTA commission (20%): ₹1,000
  • GST on commission (18%): ₹180
  • Total OTA deduction: ₹1,180
  • You can claim ₹180 as ITC