What is the GST rate on hotel rooms in India in 2026? GST on hotel rooms depends on the room tariff per night. There is no exemption for cheap rooms: the exemption for rooms up to Rs. 1,000 was withdrawn from 18 July 2022. Rooms up to Rs. 7,500 per night attract 5% GST without ITC. Rooms above Rs. 7,500 attract 18% GST with full ITC. The 12% slab was removed effective September 22, 2025, following the 56th GST Council meeting (Notification No. 15/2025-Central Tax (Rate), dated September 17, 2025).
The Goods and Services Tax (GST) on hotel and accommodation services in India uses a tiered rate structure based on the room tariff per night. Following the 56th GST Council meeting in September 2025, the earlier 12% rate for rooms was replaced with 5%, leaving a simpler 5% / 18% structure. For hotel operators, the rate you charge determines whether you can claim input tax credit on your purchases. For businesses booking hotel stays for employees, the invoice details and the state where the hotel is located decide whether the GST paid can be used as credit.
GST Rates on Hotel Accommodation: Complete Rate Table
Tax Rate Chart
GST Rates on Hotel Accommodation Services (2026)
Rate depends on declared tariff per unit of accommodation per day
Room value up to Rs. 7,500/night
No ITC : SAC 996311 (no Rs. 1,000 exemption since 18 Jul 2022)
Room tariff above Rs. 7,500/night
ITC available : SAC 996311
Banquet hall / conference room (standalone)
ITC available : SAC 996311
Camping / homestay (up to Rs. 7,500/night)
No ITC : SAC 996312
Source: Notification No. 11/2017-Central Tax (Rate) as amended by Notification No. 15/2025-Central Tax (Rate); 56th GST Council
The rate is determined by the actual transaction value of the accommodation per unit per day, not the published rack rate or listed tariff.
What Changed on September 22, 2025?
Before September 22, 2025, hotel accommodation was taxed at 12% (with ITC) for rooms up to Rs. 7,500 per night and 18% above Rs. 7,500. Rooms up to Rs. 1,000 had been exempt until 17 July 2022, when the exemption was withdrawn on the 47th GST Council's recommendation and such rooms became taxable at 12%.
The 56th GST Council meeting, held on September 3, 2025 and chaired by the Finance Minister, recommended reducing the rate on mid-range hotel rooms from 12% to 5%. The Central Board of Indirect Taxes and Customs (CBIC) notified this change through Notification No. 15/2025-Central Tax (Rate), dated September 17, 2025, effective from September 22, 2025.
The trade-off: The new 5% rate is lower for guests, but hotels in this bracket lose their ability to claim ITC on inputs such as furniture, amenities, maintenance, and utilities. For hotels with high input costs (renovations, capital expenditure), this can increase the effective cost burden despite the lower headline rate.
Input Tax Credit Rules for Hotels
Hotels Charging 5% GST (Rooms up to Rs. 7,500)
Hotels in this bracket cannot claim ITC on any goods or services used to provide accommodation. This includes:
- Furniture, fixtures, and room amenities
- Housekeeping supplies, linen, and toiletries
- Electricity, water, and utility charges
- Renovation, repair, and maintenance costs
- Software, booking platform commissions, and professional services
The 5% rate is mandatory. Hotels in this bracket cannot opt to charge 18% with ITC instead.
Hotels Charging 18% GST (Rooms Above Rs. 7,500)
Hotels in this bracket can claim full ITC on all inputs used for providing accommodation services. This includes capital goods, operating expenses, and professional services. The effective tax cost is often lower than 18% because ITC offsets a significant portion.
Mixed Tariff Hotels
If a hotel has rooms at different tariff levels (some below Rs. 7,500 and some above), the GST rate applies per unit of accommodation, not per hotel. A hotel can charge 5% on a standard room at Rs. 5,000 and 18% on a suite at Rs. 10,000. ITC must be apportioned between taxable (18%) and non-ITC (5%) supplies using Rule 42 and Rule 43 of the CGST Rules, 2017.
For a closer look at how the per-night value test works around the two cut-offs, see our guide to GST on hotel rooms across the two tariff thresholds.
GST on Restaurant Services Inside Hotels
Restaurant services inside hotels follow the Rs. 7,500 threshold rule, but the threshold is based on the hotel's room tariff, not the food bill.
A "specified premises" is defined as a hotel, inn, guest house, club, campsite, or any commercial property where the actual transaction value of any unit of accommodation exceeded Rs. 7,500 per night in the preceding financial year (Notification No. 11/2017-Central Tax (Rate), as amended).
Since April 1, 2025 (55th GST Council recommendation), a hotel that does not meet the Rs. 7,500 test can choose to be treated as a specified premises, so that its restaurant charges 18% with ITC, by filing a declaration between 1 January and 31 March of the preceding financial year, or within 15 days of getting GST registration. A hotel that has opted in can later opt out by a similar declaration. A hotel that meets the Rs. 7,500 test is a specified premises by default. A standalone restaurant cannot declare itself a specified premises (56th GST Council clarification).
GST on Banquet Halls and Conference Rooms
Banquet hall, conference room, and meeting room services at hotels attract 18% GST with ITC when booked as standalone services. This applies regardless of the hotel's room tariff.
However, when banquet and catering services are provided as a composite supply (a single bundled package with food, venue, and service), the rate depends on the nature of the supply:
- Outdoor catering services (general): 5% without ITC
- Outdoor catering at specified premises (Rs. 7,500+ hotel): 18% with ITC
- Pure venue rental without food: 18% with ITC
GST on Bundled Hotel Packages
Hotels frequently sell packages that combine room, meals, spa, airport transfer, and other services. Under GST, the treatment depends on whether the supply is "composite" or "mixed."
Composite supply: If one service is the principal supply (e.g., room accommodation) and others are naturally bundled (breakfast, Wi-Fi, parking), the entire package is taxed at the rate of the principal supply. A Rs. 6,000/night package including room and breakfast would attract 5% GST.
Mixed supply: If the services are independent and can be sold separately (room + spa session + city tour), each component is taxed at its own rate. In practice, most hotel packages are treated as composite supplies with accommodation as the principal component (Section 2(30) and Section 8, CGST Act, 2017).
ITC for Business Travellers
If your business books hotel accommodation for employees on business travel, these are the conditions to claim ITC on the room charges:
- The invoice must be a proper tax invoice with the hotel's GSTIN, your business's GSTIN, SAC code, and GST amount clearly shown
- The stay must be in the furtherance of business (employee travel for meetings, conferences, client visits), not personal consumption (Section 17(5), CGST Act)
- The invoice must reflect in your GSTR-2B for the relevant period
- Food and beverages on the hotel bill are blocked credit under Section 17(5)(b), even if the accommodation ITC is eligible. Ask the hotel to issue separate invoices for room and restaurant charges
GST Registration for Hotels
Hotels must register for GST if their aggregate turnover exceeds:
- Rs. 20 lakh in most states
- Rs. 10 lakh in Manipur, Mizoram, Nagaland and Tripura
Rooms booked through online travel platforms (MakeMyTrip, Goibibo, Booking.com, OYO) are supplies through an e-commerce operator. Under Section 9(5) (Notification No. 17/2017-Central Tax (Rate)), the platform pays the GST on accommodation booked through it when the hotel is not liable to register under Section 22(1). A hotel below the threshold that only supplies services through such platforms is not required to register merely for that reason (Notification No. 65/2017-Central Tax). A registered hotel charges GST on its bookings itself.
The Rs. 1.5 crore composition scheme (5% for restaurants) does not cover hotel accommodation, which is a service. A small hotel whose turnover in the preceding year did not exceed Rs. 50 lakh and that makes no inter-state supplies can opt for the Section 10(2A) scheme at 6% of turnover (paid by the hotel, not charged to guests), filing quarterly CMP-08 and an annual GSTR-4.
Common Mistakes Hotels Make
Step 1: Using the wrong tariff to determine the rate. The GST rate is based on the actual transaction value per unit per day, not the published rack rate, the maximum tariff on the hotel's display board, or the rate on booking platforms before discounts. If a room listed at Rs. 8,000 is sold at Rs. 6,500 after a discount, 5% GST applies (not 18%).
Step 2: Not segregating room and food charges. When a hotel bill bundles room rent and meals without separating them, ITC complications arise for business guests. Hotels should issue itemised invoices showing accommodation, restaurant, laundry, and other charges separately.
Step 3: Treating cheap rooms as exempt. Rooms priced at Rs. 1,000 or below per night have been taxable since 18 July 2022 and now attract 5%. A registered hotel that does not charge GST on them still owes the tax. Conversely, any GST collected in excess of the correct rate must be deposited with the government (Section 76, CGST Act).
Step 4: Claiming ITC at the 5% rate. Hotels supplying rooms at up to Rs. 7,500 per night at 5% cannot claim ITC on inputs used for those rooms. If they do, they face interest at 18% per annum plus penalties during audit. Hotels with mixed tariff rooms must maintain proper ITC apportionment records.
Step 5: Ignoring the "specified premises" rule for restaurants. If any room in the hotel was sold above Rs. 7,500 in the preceding financial year, the restaurant inside that hotel qualifies as a "specified premises." The restaurant must charge 18% GST with ITC for the whole financial year. This catches hotels that occasionally sell premium suites.
How Tax Garden Helps Hotels with GST
Managing GST for a hotel involves tracking multiple rate slabs, apportioning ITC for mixed-tariff properties, filing monthly GSTR-1 and GSTR-3B returns, and reconciling invoices from suppliers. Tax Garden handles your hotel's GST compliance end-to-end, from rate classification and invoice verification to return filing and ITC reconciliation, so you can focus on hospitality instead of paperwork.
Explore Tax Garden's GST compliance plans, read how to evaluate a Hyderabad GST consultant, or reach out to our team to discuss your hotel's specific requirements.
Sources: 56th GST Council recommendations and CBIC/PIB releases of September 2025; Notification No. 15/2025-Central Tax (Rate) dated 17 September 2025, effective 22 September 2025 (hotel accommodation rates of 5% and 18%, with the 12% rate reduced to 5%); Notification No. 11/2017-CT(R) as amended and the 55th GST Council (restaurant-in-hotel and specified-premises rules); Sections 2(30), 2(74), 8, 9(5), 10(2A), 17(5)(b) and 22 of the CGST Act 2017; Notifications No. 17/2017-Central Tax (Rate) and 65/2017-Central Tax; CGST Rules 2017, Rules 42 and 43 (ITC apportionment); CBIC SAC classification (996311 for accommodation). The exact SAC code for campsite and caravan services and the specified-premises declaration mechanism should be confirmed on cbic.gov.in for a specific case.
