Key Takeaways on Hotel GST
- Hotel GST rates: 5% (tariff ā¤ā¹7,500), 12% (ā¹7,500 to ā¹25,000), 18% (above ā¹25,000); no GST on food delivered outside hotel premises
- Tariff = room rent only, excluding taxes, service charges, and extras (food, laundry, mini-bar)
- Invoice must include: Room tariff, per-night duration, GST rate, GST amount, service charges (if applicable), grand total
- GSTR-1 filing: Monthly GST return showing all hotel invoices issued
- Input Tax Credit (ITC): Claim on eligible purchases (supplies, utilities, staff, maintenance)
- Common errors: Wrong GST bracket, including service charge in tariff, mixing categories, incorrect invoice details
Running a hotel means managing many moving parts: reservations, housekeeping, dining. But one part often trips hotels up: GST compliance, especially invoice generation and billing.
Hotels operate under unique GST rules. The rate depends on room tariff (price per night), not total bill. Service charges are taxed separately. Food sold outside the hotel has no GST.
This guide covers the complete GST framework for hotels in 2026, including invoice generation, billing by tariff category, GSTR filing, and compliance best practices.
Looking for expert help with hotel GST, GST rates for hotels, hotel GST invoice, hotel billing, GSTR-1 filing hotels, hotel GST compliance? 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.
Hotel GST Rates 2026: Tariff-Based Structure
Hotel GST is not a flat rate. It depends on the room tariff (price per night for accommodation, excluding taxes and extras).
GST Rate Brackets for Hotels
| Room Tariff (Per Night) | GST Rate | TDS Rate (Customers Not Registered) |
|---|---|---|
| Up to ā¹7,500 | 5% | 3% TDS under Section 194O |
| ā¹7,501 to ā¹25,000 | 12% | 6% TDS under Section 194O |
| Above ā¹25,000 | 18% | 9% TDS under Section 194O |
Examples of Tariff Calculation
Example 1: Budget Hotel (Tariff ā¹5,000 per night)
- Room tariff: ā¹5,000 (falls in ā¤ā¹7,500 bracket)
- GST rate: 5%
- GST amount: ā¹5,000 Ć 5% = ā¹250
- Customer pays: ā¹5,000 + ā¹250 = ā¹5,250
Example 2: Mid-Range Hotel (Tariff ā¹15,000 per night)
- Room tariff: ā¹15,000 (falls in ā¹7,501 to ā¹25,000 bracket)
- GST rate: 12%
- GST amount: ā¹15,000 Ć 12% = ā¹1,800
- Customer pays: ā¹15,000 + ā¹1,800 = ā¹16,800
Example 3: Luxury Hotel (Tariff ā¹40,000 per night)
- Room tariff: ā¹40,000 (falls in >ā¹25,000 bracket)
- GST rate: 18%
- GST amount: ā¹40,000 Ć 18% = ā¹7,200
- Customer pays: ā¹40,000 + ā¹7,200 = ā¹47,200
Critical Point: What Counts As Tariff?
| Item | Included in Tariff? | Impact on GST Rate |
|---|---|---|
| Room rent | ā Yes | Direct impact |
| Complementary breakfast | ā No | Separate 5% GST |
| Paid add-ons (room service, mini-bar, laundry) | ā No | Separate GST (5%, 12%, or 18% based on item) |
| Parking charges | ā No | Separate 5% or 12% GST |
| Service charges | ā No | Separate 18% GST (even if room is 5%) |
| Resort tax / city levy | ā No | Usually 0% GST (exempted) |
| Advance deposits | ā No | GST only when room is actually occupied |
| Cancellation charges | ā Yes | Treated as consideration, GST applicable |
Critical mistake: Including service charges or add-ons in the tariff inflates the GST bracket, resulting in excess tax liability.
Hotel GST Invoice: Mandatory Details
A hotel GST invoice must include:
Basic Invoice Details
| Field | Details |
|---|---|
| Invoice Number | Unique, sequential (e.g., HIN-2026-0001) |
| Invoice Date | Date of occupancy (or check-out date if multi-day stay) |
| Hotel GSTIN | 15-digit GST registration number |
| Hotel Name & Address | Full business address with state code |
| Customer PAN/GSTIN | If provided by customer (use "Unregistered" if not) |
| Customer Name & Address | Guest name and contact address |
Item-Level Details
| Field | Example |
|---|---|
| Description | "Room Rent, 2 Nights, Room No. 305" |
| HSN Code | 9903 for hotel accommodation |
| Quantity | Number of nights (or room stays) |
| Unit | Per night / Per stay |
| Rate per unit | ā¹5,000 (room tariff only) |
| Amount | ā¹5,000 Ć 2 nights = ā¹10,000 |
| GST Rate applicable | 5% |
| CGST | ā¹10,000 Ć 2.5% = ā¹250 |
| SGST | ā¹10,000 Ć 2.5% = ā¹250 |
| Total GST | ā¹500 |
Service Charges (If Applicable)
If the hotel charges a service charge (usually 15 to 20% of room rent), it is taxed separately at 18% GST, regardless of the room tariff bracket.
| Item | Amount | GST Rate | GST Amount |
|---|---|---|---|
| Room Rent (2 nights) | ā¹10,000 | 5% | ā¹500 |
| Service Charge (15%) | ā¹1,500 | 18% | ā¹270 |
| Total | ā¹11,500 | Mixed | ā¹770 |
Add-On Items (Food, Laundry, Parking)
| Add-On | Base Amount | GST Rate | GST |
|---|---|---|---|
| Room service (food) | ā¹2,000 | 5% | ā¹100 |
| Laundry service | ā¹500 | 5% | ā¹25 |
| Minibar | ā¹1,500 | 5% | ā¹75 |
| Parking (per night) | ā¹300 | 5% | ā¹15 |
Hotel GST Invoice Format: Complete Example
TAX INVOICE
Hotel: "The Grandview Hotel" | GSTIN: 36AABCT0001A1Z0
Invoice No.: HIN-2026-0851 | Date: 25-Aug-2026
Guest Details:
Name: Mr. Rajesh Kumar
PAN: ABCDE1234F
Address: Mumbai
---
S.No | Description | HSN | Qty | Rate | Amount | GST% | CGST | SGST | Total
1 | Room Rent | 9903| 2 | 5000 | 10,000 | 5% | 250 | 250 | 10,500
| (Tariff ā¤7500)
2 | Service Chg | 9903| 1 | 1500 | 1,500 | 18% | 135 | 135 | 1,770
3 | Parking | 9903| 2 | 300 | 600 | 5% | 15 | 15 | 630
---
Subtotal (excl. GST): ā¹12,100
Total CGST: ā¹400
Total SGST: ā¹400
Grand Total (incl. GST): ā¹12,900
Authorized Signatory: [Signature]
Hotel Billing: Multi-Day Stays
For stays spanning multiple nights, you can invoice daily or issue one invoice at checkout. GST applies on each night based on the tariff rate.
Example: 5-Night Stay
| Night | Tariff | GST Rate | GST | Amount (incl. GST) |
|---|---|---|---|---|
| Night 1 | ā¹8,000 | 12% | ā¹960 | ā¹8,960 |
| Night 2 | ā¹8,000 | 12% | ā¹960 | ā¹8,960 |
| Night 3 | ā¹8,000 | 12% | ā¹960 | ā¹8,960 |
| Night 4 | ā¹8,000 | 12% | ā¹960 | ā¹8,960 |
| Night 5 | ā¹8,000 | 12% | ā¹960 | ā¹8,960 |
| Total | ā¹40,000 | 12% | ā¹4,800 | ā¹44,800 |
Hotel GST Input Tax Credit (ITC)
Hotels can claim ITC on eligible purchases:
Eligible for ITC
- Utilities (electricity, water, gas)
- Maintenance and repair supplies
- Staff salaries and wages (no ITC)
- Food and beverages (if purchased from GST-registered suppliers)
- Cleaning supplies
- Linens and laundry services
- Equipment and furnishings
Not Eligible for ITC
- Advance deposits (not invoiced)
- Personal consumption items
- Supplies without GST invoices (ITC blocked)
- Motor vehicles (only 50% ITC)
- Food consumed by staff (no ITC if separately accounted)
ITC Calculation Example
| Purchase | Amount | GST Rate | GST (ITC Claimable) |
|---|---|---|---|
| Food supplies | ā¹50,000 | 5% | ā¹2,500 |
| Laundry service | ā¹5,000 | 5% | ā¹250 |
| Electricity | ā¹10,000 | 5% | ā¹500 |
| Furniture | ā¹1,00,000 | 12% | ā¹12,000 |
| Total ITC | ā¹1,65,000 | ā¹15,250 |
GSTR-1 Filing for Hotels
Hotels must file GSTR-1 (GST return of outward supplies) every month by the 11th of the following month.
GSTR-1 for a Hotel (Example)
| B2B Invoices (GST-Registered Customers) | Amount | GST |
|---|---|---|
| Room rent invoices issued | ā¹5,00,000 | ā¹45,000 |
| Service charges | ā¹30,000 | ā¹5,400 |
| B2C Invoices (Non-Registered Customers) | Amount | GST |
|---|---|---|
| Room rent invoices issued | ā¹8,00,000 | ā¹72,000 |
| Food and beverages | ā¹2,50,000 | ā¹12,500 |
| Total GST Liability | ā¹1,35,000 |
The hotel reports all invoices in GSTR-1, and the tax authorities cross-verify with GSTR-2B filed by customers who purchased from the hotel.
GSTR-3B Filing and Tax Payment
Hotels must file GSTR-3B (monthly GST return and payment) by the 20th of the following month.
GSTR-3B Calculation Example
| Item | Amount |
|---|---|
| Outward GST (GSTR-1) | ā¹1,35,000 |
| Less: ITC Claimed (GSTR-2B) | (ā¹15,250) |
| Net GST Payable | ā¹1,19,750 |
The hotel deposits ā¹1,19,750 via GST challan by the 20th of the following month.
Common Hotel GST Errors & How to Avoid Them
| Error | Impact | Fix |
|---|---|---|
| Including service charge in tariff | Overstates GST bracket | Separate service charge (18% GST) from room rent |
| Wrong GST rate for tariff bracket | Excess/underpayment of GST | Verify tariff and apply correct bracket (5%, 12%, 18%) |
| Mixing occupancy tax with tariff | Inflates tariff, wrong bracket | Exclude resort tax/city levy from tariff calculation |
| No invoice for cash payments | GST evasion, audit risk | Always issue invoices, even for walk-in guests |
| Incorrect HSN code | Audit flag | Use HSN 9903 for hotel accommodation |
| Claiming ITC on ineligible items | ITC reversal, penalties | Maintain records; claim only on eligible purchases |
| Delayed GSTR filing | Penalties ā¹500 to ā¹5,000 | File by 11th/20th of following month |
Key Takeaways
-
GST rates are tariff-based: 5% (ā¤ā¹7,500), 12% (ā¹7,501 to ā¹25,000), 18% (>ā¹25,000)
-
Tariff = room rent only. Exclude service charges, add-ons, taxes.
-
Service charges taxed at 18% regardless of room tariff bracket.
-
Invoice must include: Room tariff, nights, GST rate, GST amount, add-ons, service charges.
-
ITC claimable on eligible supplies (utilities, food, maintenance, linens).
-
GSTR-1 by 11th and GSTR-3B by 20th of following month.
-
TDS may apply at 3%, 6%, or 9% for cash payments from unregistered customers (Section 194O).
Where Tax Garden Helps
Hotel GST compliance is nuanced. One tariff miscalculation affects your GST bracket for the entire stay, cascading into GSTR-1 and GSTR-3B errors.
Tax Garden's CAs help hotels with:
- Correct tariff classification and GST rate application
- Accurate hotel GST invoice generation
- GSTR-1 and GSTR-3B filing
- ITC optimization and reconciliation
- Advance payment (TDS under Section 194O) handling
- Audit-proof documentation
Looking for expert help with hotel GST, GST rates for hotels, hotel GST invoice, hotel billing, GSTR-1 filing hotels, hotel GST compliance? 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.
Hotel GST: Frequently Asked Questions
What is the GST rate for hotels?
Hotel GST rates depend on room tariff (price per night): 5% for tariff up to ā¹7,500, 12% for ā¹7,501 to ā¹25,000, and 18% for above ā¹25,000. Tariff includes room rent only, not service charges or add-ons.
Is service charge taxed separately from room GST?
Yes. Service charges are always taxed at 18% GST, separate from the room tariff. A 5% room and 18% service charge means the customer pays: room (5% GST) + service charge (18% GST).
What items are included in the room tariff for GST calculation?
Only room rent (price per night) is included in tariff. Excluded: service charges, food, laundry, parking, minibar, resort tax, city levy, any paid add-ons. These are billed separately with their own GST rates.
Can a hotel change GST rate mid-stay?
No. Once a tariff is set for a booking, the GST rate is fixed for all nights of that stay, even if the customer extends. Extending to a new booking would use the new tariff and GST rate.
What is the GST rate on food delivered outside the hotel?
Food delivered outside the hotel premises (e.g., catering for an event at another venue) is not taxed as 'hotel food' but as 'restaurant/catering service' and follows standard GST rates (5 to 18% depending on nature).
Can hotels claim ITC on all purchases?
No. Hotels can claim ITC only on GST-registered supplies (electricity, food from registered suppliers, linens, maintenance). ITC is blocked on non-registered purchases, personal items, and certain goods like motor vehicles (50% only).
What is Section 194O TDS for hotels?
Section 194O mandates TDS deduction at 3%, 6%, or 9% on hotel bills paid in cash by non-registered customers. Hotels deduct and deposit TDS within 5 days and issue TDS certificates.
Can a hotel issue consolidated invoices for multi-night stays?
Yes. A hotel can issue one invoice at checkout for the entire stay, breaking down each night with its tariff and GST. Alternatively, nightly invoices can be issued.
What is the filing deadline for GSTR-1 and GSTR-3B for hotels?
GSTR-1 (return of supplies) must be filed by the 11th of the following month. GSTR-3B (tax payment return) must be filed by the 20th of the following month. Late filing incurs penalties.
How do hotels report room cancellations in GSTR?
Cancelled bookings are not reported in GSTR-1 if no invoice was issued. If an invoice was issued and later cancelled, a credit note is issued and reported in GSTR-1 to reverse the liability.
Sources: CBDT Circular No. 129/11/2020-GST; GST Council Decision (December 2022); ICAI Hotel Industry Guidance; RBI Notifications; Hotel Association of India. Verify current rules on incometax.gov.in and gst.gov.in before implementing, as rates and rules may change. This article is general information on hotel GST compliance and not a substitute for professional advice.
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