GST on Hotel Rooms — Rate Structure 2025
The GST rate structure for hotel accommodation in India is tiered based on the declared room tariff per night. The tariff that determines the GST rate is the declared or published tariff — the rate listed by the hotel for that room category — not the discounted rate at which the room is actually booked through aggregators like MakeMyTrip, Goibibo, or the hotel's own website. This distinction is important: a hotel room with a declared tariff of Rs.8,000 that is booked for Rs.6,000 through a discount portal still attracts 18% GST because the declared tariff exceeds Rs.7,500.nnFrom 18 July 2022, the GST rate structure for hotel rooms is: rooms with declared tariff below Rs.1,000 per night are exempt (0% GST); rooms with declared tariff between Rs.1,000 and Rs.7,500 per night attract 12% GST; and rooms with declared tariff above Rs.7,500 per night attract 18% GST. This three-tier structure replaced the previous two-tier structure and provided significant relief to budget and economy hotels whose rooms were previously taxed at 12% even when priced between Rs.1,000 and Rs.2,500.nnThe GST on hotel accommodation applies to all forms of paid lodging: standard hotel rooms, suites, serviced apartments, homestays registered as hotels, guesthouses, and lodges. Dharamshalas and religious guest houses run by registered charitable trusts with room charges below Rs.1,000 per night were already exempt under the charitable services exemption. Airbnb-type short-term rental apartments are also subject to hotel accommodation GST if the annual aggregate rental income exceeds the GST registration threshold.
| Declared Room Tariff Per Night | GST Rate | ITC Available to Hotel? |
|---|---|---|
| Below Rs.1,000 per night | 0% (exempt) | No (exempt supply) |
| Rs.1,000 to Rs.7,500 per night | 12% | Yes — ITC on inputs |
| Above Rs.7,500 per night | 18% | Yes — ITC on inputs |
| Banquet hall and event space rental | 18% | Yes — ITC on inputs |
| Outdoor catering by hotel | 5% | No ITC |
| Restaurant in hotel (all rooms <= Rs.7,500) | 5% | No ITC |
| Restaurant in hotel (any room > Rs.7,500) | 18% | Yes — ITC on inputs |
GST on Hotel Restaurants — The Rs.7,500 Room Tariff Rule
One of the most frequently misunderstood aspects of hotel GST is the restaurant rate, which is determined by the hotel's room tariff rather than the restaurant's own pricing. A restaurant located inside a hotel or as part of the hotel premises follows the room tariff rule: if any room in the hotel has a declared tariff of Rs.7,500 or above, all restaurant services at that hotel attract 18% GST with Input Tax Credit available to the hotel. If all rooms in the hotel are priced below Rs.7,500 declared tariff, restaurant services attract 5% GST without ITC.nnThis rule creates a noticeable difference in food bills across hotel categories. A business traveller dining in a five-star hotel restaurant pays 18% GST on their meal. The same traveller dining in a mid-market hotel where the most expensive room is Rs.7,000 per night pays only 5% GST. For corporate clients who regularly host client dinners in hotel restaurants, the GST rate difference can be significant on high-value F&B bills.nnFor hotels with multiple categories of rooms — some standard rooms below Rs.7,500 and some suites or deluxe rooms above Rs.7,500 — the entire hotel is treated as a single entity for GST rate determination. If even one room category has a declared tariff above Rs.7,500, the 18% rate applies to all restaurant, banquet, and catering services of that hotel. Hotels should periodically review their declared tariff structure when assessing GST compliance and inform guests of the applicable restaurant GST rate.
GST on Banquet Halls, Event Spaces and Wedding Venues
Banquet halls, conference rooms, wedding venues, and event spaces attract 18% GST under SAC code 996321 (convention centre and event services). This rate applies whether the venue is standalone or within a hotel. For hotels providing the venue along with catering — a common arrangement for weddings and corporate events — the composite package attracts 18% GST on the venue rental and 5% on the catering component if separately invoiced, or 18% on the entire package if provided as a composite service.nnFor destination weddings at premium hotels, the GST invoicing must carefully distinguish between: accommodation charges (at the applicable room rate — 12% or 18%), food and beverage charges (18% if hotel has rooms above Rs.7,500, 5% if not), venue rental for the ceremony and reception (18%), and ancillary services like flower decoration, sound system, and photography coordination (18% for hotel-arranged services). Misclassifying the entire wedding invoice under a single rate causes compliance issues.nnFor corporate events — conferences, off-sites, product launches — held at hotel banquet facilities, businesses can claim ITC on the 18% GST paid on the venue rental since it is a business expense. However, ITC on food and beverages served at the event is blocked under Section 17(5)(b) — corporate event catering is one of the most commonly claimed-but-blocked ITC items. ITC on audio-visual equipment rental, event management services, and business presentation support services is available as these are business services.
OTA Platforms and TCS on Hotel Bookings
Online Travel Aggregators (OTAs) — MakeMyTrip, Yatra, Booking.com, Agoda, Expedia — are e-commerce operators under GST and are required to collect TCS (Tax Collected at Source) at 1% on the net value of hotel accommodation booked through their platform. This 1% TCS is collected from hotels on the net value of bookings (after any commissions) and deposited with the government.nnThe GST on the hotel room booking is collected by the hotel directly from the guest at the time of checkout — OTAs do not charge GST on behalf of the hotel. The hotel issues the GST invoice to the guest and pays the GST to the government. The OTA's 1% TCS is on the payment made by the OTA to the hotel (the net settlement after OTA commission) — it is a compliance mechanism to track transactions through the OTA ecosystem, not an additional tax on the guest.nnFor corporate travellers booking hotel rooms through corporate travel agencies or OTAs, GST-registered companies can claim ITC on the hotel accommodation GST if the stay is for business purposes. The hotel GST invoice must be in the company's name with the company's GSTIN for ITC to be claimable. Many OTAs now allow corporate account holders to provide their GSTIN for GST invoicing. Hotel GST invoices with the employee's personal name cannot be used for company ITC claims.
ITC for Hotels — What Can Be Claimed
Hotels are eligible for comprehensive Input Tax Credit on their business inputs since hospitality is a taxable service. Hotels can claim ITC on: construction and renovation of hotel premises (except for own-use blocked credit — but hotels constructing commercial premises for providing taxable hospitality services can claim ITC on construction), furniture and fittings purchased for hotel rooms, kitchen equipment and appliances, laundry equipment, point-of-sale and hotel management software, housekeeping supplies, uniforms for staff, security services, maintenance contracts, and all other goods and services used in providing taxable hotel services.nnHotels operating in exempt categories — budget hotels where all rooms are below Rs.1,000 per night — cannot claim ITC on inputs related to exempt room supply. Hotels with a mix of exempt rooms (below Rs.1,000) and taxable rooms must apportion ITC proportionately under Rule 42. For most mid-market and luxury hotels, all rooms are in taxable categories and ITC is available on all business inputs.nnFor corporate clients staying at hotels, ITC is claimable on hotel room accommodation at 12% or 18% GST provided: the invoice is in the company's GSTIN name, the stay is for a legitimate business purpose, and the hotel is GST-registered and has filed their returns. Food and beverages consumed at the hotel are blocked under Section 17(5)(b) regardless of business purpose — this is the one area where even legitimate business hotel stays cannot generate ITC.
