What is the GST rate on hotel rooms in India in 2026? GST on hotel rooms depends on the room tariff per night. Rooms up to Rs. 1,000 are exempt. Rooms between Rs. 1,001 and Rs. 7,500 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% slab was removed and replaced with a simpler 0% / 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 rate determines whether you can recover the GST paid.
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 tariff up to Rs. 1,000/night
Exempt : SAC 996311
Room tariff Rs. 1,001 to Rs. 7,500/night
No ITC : SAC 996311
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 had four effective rate slabs:
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 Rs. 1,001 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.
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, restaurants in "specified premises" can choose to charge 5% GST without ITC instead of the default 18% with ITC, by filing a declaration on the GST portal 55th GST Council recommendation).
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, the ITC position depends on the room tariff:
To claim ITC on hotel accommodation at the 18% rate:
- 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 TwoB 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 special category states (Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand)
Hotels listed on online travel platforms (MakeMyTrip, Goibibo, Booking.com, OYO) that facilitate bookings fall under the definition of supply through e-commerce operators. GST registration is mandatory for such hotels regardless of turnover (Section 24(ix), CGST Act).
Hotels with turnover up to Rs. 1.5 crore can opt for the Composition Scheme if they do not supply through e-commerce platforms and do not make inter-state supplies. Under composition, they pay 5% GST on turnover (from own pocket, not charged to guests) and file quarterly CMP-08 returns 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: Charging GST on exempt rooms.** Rooms priced at Rs. 1,000 or below per night are exempt. If a hotel charges GST on such rooms, the guest can demand a refund. The hotel would need to deposit the incorrectly collected GST with the government (Section 76, CGST Act).
Step 4: Claiming ITC at the 5% rate.** Hotels operating in the Rs. 1,001 to Rs. 7,500 bracket cannot claim ITC on any inputs. 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 (or opt for 5% without ITC via declaration). 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 One and GSTR ThreeB 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 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 slabs of 0/5/18 and the reduction of the 12% slab 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, 17 5)(b), 22 and 24(ix) of the CGST Act 2017; 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.
