Looking for expert help with GST on guest house room rent, lodge GST rate India, homestay GST registration, GST on lodging, guest house GST rate 2026? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Do guest houses, lodges and homestays pay GST in India? Yes, and they use exactly the same accommodation rate structure as hotels. Rooms up to Rs. 1,000 per night are exempt, rooms from Rs. 1,001 to Rs. 7,500 attract 5% without input tax credit, and rooms above Rs. 7,500 attract 18% with full credit. The rate is set by the transaction value of each unit per day, not by whether the property calls itself a hotel, a lodge, a guest house, or a homestay.
Small accommodation providers get the GST question wrong in one of two directions. Some assume that because the property is a homestay or a family-run lodge rather than a hotel, GST does not apply. Others register the moment they open and start charging 18% on a Rs. 900 room. Both cost money.
The law does not grade accommodation by label. Notification No. 11/2017-Central Tax (Rate) taxes "accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes" as a single class of supply. A guest house and a five-star hotel sit in the same entry. What separates them is the tariff of each unit and the turnover of the supplier.
GST Rates on Guest House, Lodge and Homestay Accommodation
Tax Rate Chart
GST on Accommodation Services from September 22, 2025
Rate is driven by transaction value per unit of accommodation per day
Room up to Rs. 1,000 per night
Exempt : SAC 996311
Room Rs. 1,001 to Rs. 7,500 per night
No ITC : SAC 996311
Room above Rs. 7,500 per night
Full ITC : SAC 996311
Camp site, caravan, holiday centre stay
Up to Rs. 7,500 : SAC 996312
Restaurant inside non-specified premises
No ITC : SAC 996331
Restaurant inside specified premises
Full ITC : SAC 996331
Source: Notification No. 11/2017-Central Tax (Rate) as amended by Notification No. 05/2025 and No. 15/2025-Central Tax (Rate)
The 56th GST Council meeting removed the 12% accommodation slab. The Central Board of Indirect Taxes and Customs (CBIC) notified the change through Notification No. 15/2025-Central Tax (Rate) dated September 17, 2025, effective September 22, 2025. For most guest houses and lodges, which price between Rs. 1,000 and Rs. 7,500, the practical result was a drop from 12% with credit to 5% without credit.
That trade is not automatically good news. A lodge that spent heavily on renovation, air conditioning, furniture, or a new generator loses the credit on all of it. The tax on those inputs becomes a cost that sits inside your room rate. Where your input tax is large relative to your room revenue, the 5% bracket can be more expensive in cash terms than the old 12% was.
For the full rate history and the input credit mechanics, see the detailed treatment in GST on hotels and accommodation services.
The Rs. 1,000 Threshold: How It Actually Works Now
The original 2017 exemption for accommodation below Rs. 1,000 per day was withdrawn with effect from July 18, 2022, and everything below Rs. 7,500 moved into the 12% bracket. The September 2025 restructuring brought a nil rate back for the sub Rs. 1,000 band.
| Period | Up to Rs. 1,000 | Rs. 1,001 to Rs. 7,500 | Above Rs. 7,500 |
|---|---|---|---|
| Before July 18, 2022 | Exempt | 12% with ITC | 18% with ITC |
| July 18, 2022 to September 21, 2025 | 12% with ITC | 12% with ITC | 18% with ITC |
| From September 22, 2025 | Nil | 5% without ITC | 18% with ITC |
Three points decide which band a booking falls in.
The test is per unit, per day. A guest staying four nights at Rs. 900 is in the nil band, not the Rs. 3,600 band. Two rooms booked together at Rs. 900 each are two units at Rs. 900, not one supply at Rs. 1,800.
The test uses transaction value, not the rack rate. The pre-2025 law used "declared tariff", which meant a discounted room could still be taxed on its published price. The current wording follows the value actually charged, so a Rs. 8,000 room sold at Rs. 7,200 in the off season is taxed at 5% for that stay.
Charges that form part of the same supply come into the value. An extra bed charge, a compulsory service charge, or a mandatory package element is part of the accommodation value and can push a Rs. 950 room over the line. A genuinely optional and separately supplied item, such as a paid airport transfer, is a separate supply on its own merits.
A property running a Rs. 950 tariff sits one small increase away from a 5% liability on every room night. If you plan a rate revision, model the point at which crossing Rs. 1,000 stops being worth the extra tax and the compliance that comes with it.
When Registration Becomes Mandatory
Charging GST and being liable to register are different questions. A homestay charging Rs. 4,000 a night is in the 5% band as a matter of rate, but charges nothing at all until it is registered.
| Supplier location | Aggregate turnover threshold for services |
|---|---|
| Normal category states | Rs. 20 lakh in a financial year |
| Special category states (Manipur, Mizoram, Nagaland, Tripura) | Rs. 10 lakh in a financial year |
Aggregate turnover is computed on a PAN basis across all of India and includes taxable supplies, exempt supplies, exports, and inter-state supplies. Two things follow that catch small operators out.
Exempt room revenue counts. A lodge running entirely at Rs. 900 a night has no GST to charge, but those receipts still build toward the Rs. 20 lakh threshold, and crossing it makes registration mandatory even though the output remains exempt.
Other business income on the same PAN counts. Restaurant receipts, hall or lawn hire, a shop, laundry billed separately, and consultancy income under the same PAN aggregate together. Many guest house owners cross Rs. 20 lakh on the combination rather than on rooms alone.
Compulsory registration under Section 24 can also apply irrespective of turnover, most commonly where you make an inter-state taxable supply of goods or where you are liable to pay tax under reverse charge. Accommodation supplied to a guest from another state is not treated as an inter-state supply for this purpose, because the place of supply for accommodation is the location of the property under Section 12(3) of the IGST Act. That single rule is why a purely local homestay usually escapes compulsory registration.
The step-by-step application flow, document list, and ARN tracking are covered in the GST registration process guide, and you can follow your application using the GST ARN status check guide.
Should You Register Voluntarily?
Voluntary registration under Section 25(3) is worth it in three situations.
- Corporate guests. Companies booking staff accommodation want a tax invoice with their GSTIN so their travel spend is documented. Unregistered properties get dropped from approved vendor lists.
- Rooms above Rs. 7,500. In the 18% band credit is available, so registration converts input tax on utilities, maintenance, and commissions into a recoverable amount.
- A build or refit ahead of opening. Registration before major capital spend preserves credit that is otherwise lost, provided your output will be in the 18% band.
Against that, registration is permanent until cancelled, brings monthly or quarterly returns, and in the 5% band gives you no credit to recover. If you are a single-property homestay in the 5% band, voluntary registration mostly adds cost.
Homestays Listed on Airbnb and Other Platforms
This is where the draft guidance circulating online is most often wrong, because two different provisions get merged into one.
Section 9(5) of the CGST Act notifies certain services, including hotel accommodation service, where the electronic commerce operator is made liable to pay the tax as if it were the supplier. This applies where the underlying supplier is unregistered. The operator pays, the host does not charge GST, and Notification No. 65/2017-Central Tax relieves the host from compulsory registration under Section 24(ix).
Section 52 is tax collected at source. It applies where a registered supplier sells through an operator that collects the consideration. The operator collects 1% and reports it in GSTR-8, and the supplier claims it in the electronic cash ledger.
The two never apply to the same supply. If you are unregistered and the platform pays under Section 9(5), there is no TCS on you. If you are registered, Section 9(5) steps aside for that supply and TCS applies instead. The mechanics of operator collection are set out in GST on e-commerce operators and TCS under Section 52.
Two practical consequences. First, platform-collected tax does not reduce your own turnover for threshold purposes, so keep counting toward Rs. 20 lakh regardless. Second, direct bookings taken outside the platform are entirely your own supply, and once you are registered you must charge and report GST on them yourself.
Specified Premises: What It Changes and What It Does Not
Notification No. 05/2025-Central Tax (Rate) replaced the old declared tariff concept with "specified premises" from April 1, 2025. A premises is specified for a financial year if the value of supply of any unit of accommodation there exceeded Rs. 7,500 per unit per day in the preceding financial year, or if the supplier filed a declaration opting in.
The status is declared, not assumed.
| Situation | Form | Timing |
|---|---|---|
| Registered person opting in for a financial year | Annexure VII | Between January 1 and March 31 of the preceding financial year |
| New applicant opting in | Annexure VIII | Within 15 days of obtaining acknowledgement of the registration application |
| Registered person opting out | Annexure IX | Between January 1 and March 31 of the preceding financial year |
For financial year 2026-27, the opt-in and opt-out window closes on March 31, 2026.
Now the correction that matters, because it is stated incorrectly in most summaries. Specified premises status does not move every room in the property to 18%. Since September 22, 2025 the accommodation rate is set by the transaction value of each unit per day, so a Rs. 4,000 room in a specified premises is still taxed at 5%. What the status actually governs is the restaurant service supplied inside the premises, which moves from 5% without credit to 18% with credit.
That distinction decides whether opting in is sensible. A lodge with a busy kitchen, heavy raw material purchases, and a large equipment base may prefer 18% with credit on its food service. A property whose restaurant is a small breakfast counter almost certainly should not opt in. The comparison across formats is worked through in GST on restaurant and food services.
Being an MSME changes none of this. The classification runs on accommodation value and the declaration, not on enterprise size.
Food, Breakfast and Bundled Packages
Most guest houses and homestays serve food in some form, and the tax treatment turns on how it is sold rather than what is served.
Breakfast included in the room rate. This is a composite supply under Section 2(30). Accommodation is the principal supply, so the whole consideration takes the accommodation rate. A Rs. 1,500 room with breakfast included is one supply at 5%.
Food charged separately. This is restaurant service in its own right, taxed at 5% without credit, or 18% with credit if the premises is specified.
A package of stay, meals and an activity at a single price. Where the elements are not naturally bundled, Section 2(74) treats it as a mixed supply and the highest rate in the package applies to the whole of it. A stay-plus-adventure-activity package priced as one figure can therefore pull the accommodation into a higher rate than it would have carried alone. Pricing the components separately on the invoice avoids that outcome.
Compliance Once You Are Registered
Invoicing. Issue a tax invoice under Section 31 with your GSTIN, invoice number and date, SAC 996311, taxable value, and the tax split. Exempt rooms need a bill of supply, not a tax invoice. Where a room is exempt and food on the same bill is taxable, an invoice-cum-bill of supply is permitted. The full document format is covered in the hotel GST invoice and billing guide.
Returns. Monthly filers submit GSTR-1 by the 11th and GSTR-3B by the 20th of the following month. Turnover up to Rs. 5 crore can opt into the quarterly return with monthly payment scheme, which suits seasonal properties with uneven occupancy. See the QRMP scheme guide and the GSTR-3B filing guide.
Annual return. GSTR-9 is optional up to Rs. 2 crore of aggregate turnover, which exempts most single-property operators. GSTR-9C reconciliation begins above Rs. 5 crore.
Credit reversal on mixed tariffs. If you run exempt rooms below Rs. 1,000 alongside taxable rooms, common input tax must be apportioned and the exempt share reversed under Rule 42. This is the single most commonly missed step for properties with a wide tariff spread.
Records. Keep the tariff history for each room, because a rate applied two years ago may need to be justified against the value actually charged on that date. Occupancy registers, invoice series, and purchase records complete the set.
Worked Example: A Nine-Room Hill Station Lodge
A lodge has four rooms at Rs. 900, four at Rs. 2,400, and one suite at Rs. 8,200. Annual receipts are Rs. 31 lakh from rooms and Rs. 6 lakh from the dining room.
Aggregate turnover is Rs. 37 lakh, so registration is mandatory. The four Rs. 900 rooms are exempt and go on a bill of supply. The four Rs. 2,400 rooms are at 5% with no credit. The suite at Rs. 8,200 is at 18% with credit available on inputs attributable to it.
Because a unit exceeded Rs. 7,500 per day this year, the property becomes a specified premises for the next financial year unless the suite tariff is brought down. That does not change any room rate, but it moves the Rs. 6 lakh of dining income from 5% to 18% with credit. Whether that helps depends on the kitchen's input tax, and the answer here usually turns on whether raw material purchases are from registered suppliers.
Common input tax across the property must be apportioned under Rule 42, since exempt, 5%, and 18% supplies all coexist.
Key Points to Remember
- The label on the property is irrelevant. A guest house, lodge, inn, homestay, or campsite is taxed on the same accommodation entry as a hotel.
- Rooms up to Rs. 1,000 a night are exempt, Rs. 1,001 to Rs. 7,500 attracts 5% without credit, and above Rs. 7,500 attracts 18% with credit, tested per unit per day on transaction value.
- Registration is triggered by aggregate turnover of Rs. 20 lakh (Rs. 10 lakh in special category states), and exempt room revenue counts toward it.
- Specified premises status changes the restaurant rate, not the room rate. Nothing pushes a Rs. 4,000 room to 18%.
- Unregistered hosts supplying through a platform are covered by Section 9(5), where the operator pays the tax. Registered hosts face Section 52 tax collected at source instead.
- Running exempt and taxable rooms together triggers Rule 42 credit apportionment, which is the most frequently missed obligation in small accommodation businesses.
Statutory references: Notification No. 11/2017-Central Tax (Rate) as amended by Notification No. 05/2025 and No. 15/2025-Central Tax (Rate); Sections 2(30), 2(74), 22, 24, 25, 31, and 52 of the CGST Act, 2017; Rule 42 of the CGST Rules, 2017; Notification No. 65/2017-Central Tax; Section 12(3) of the IGST Act, 2017. Verify current rates and thresholds on gst.gov.in before acting. This article is general information and not a substitute for professional advice.
