Hotel Room GST Rate in 2026: The ₹7,500 Rule, Restaurants, Banquets and OTA Bookings

Hotel GST changed on 22 September 2025, and many booking pages and bills still show the old rates. Whether you're a traveller checking a hotel bill, a company booking business stays, or a hotel, guest house or homestay owner setting tariffs, this guide gives the 2026 position: the 5% and 18% room rates and the ₹7,500 line, how the "per unit per day" test works with discounts and long stays, what happens to the hotel's input tax credit (ITC), restaurant and banquet rates inside hotels, bookings through travel apps, and worked ₹ bills. Rates were checked against the GST Council's notified decisions and FAQs in October 2026.

Quick answer

Hotel rooms with a value of up to ₹7,500 per room per day attract 5% without ITC. Rooms above ₹7,500 attract 18% with ITC. The test is the actual price charged for the room, after discounts. The 5% rate replaced 12% with ITC on 22 September 2025.

• Exactly ₹7,500 a night is 5%; ₹7,501 and above is 18%

• Hotels can't opt for 18% with ITC on rooms up to ₹7,500

• Hotel restaurants: 18% with ITC if any room crossed ₹7,500 last year (or the hotel opted in), otherwise 5% (no input tax credit)

• Booked through an app: the platform pays the GST only if the hotel isn't liable to register

• Business guests can claim the room GST as ITC — through a registration in the hotel's state

Hotel room GST rates in 2026

Hotel accommodation is a service under heading 9963 (accommodation, food and beverage services). Its rate is set by Notification 11/2017–Central Tax (Rate), last amended for hotels by Notification 15/2025–Central Tax (Rate) on the recommendation of the 56th GST Council. The structure now has just two bands.

The Council's FAQs answer the obvious follow-up directly: a hotel cannot choose to pay 18% on a room worth up to ₹7,500 to keep its credits. The lower rate is mandatory, and it comes with the condition that the hotel does not take credit of the GST on goods and services used to supply that room.

HSN or SAC code. Hotel and similar accommodation is reported under SAC 9963 — the six-digit code 996311 covers room or unit accommodation in hotels, inns, guest houses and similar. Restaurant service is under 996331.

Who is covered. The same rates apply to hotels, inns, guest houses, lodges, clubs, campsites, homestays and other commercial places meant for residential or lodging purposes, when they let rooms by the day or night. Long-term residential renting of a flat is a different supply — see GST on rent — and hostel or PG accommodation up to ₹20,000 per person a month for stays of 90 days or more is exempt.

How the ₹7,500 test works

The rate depends on the value of supply of a unit of accommodation per unit per day or equivalent. Four practical rules follow from that wording.

1. It's the actual price, not the rack rate. What counts is the transaction value — the price you actually pay for the room, after any discount, coupon or corporate rate. A room with a published rate of ₹9,000 sold on a weekday deal for ₹7,200 attracts 5% on ₹7,200. A room published at ₹7,000 sold at ₹8,200 during a festival weekend attracts 18%.

2. Exactly ₹7,500 is 5%. The 5% band covers values "less than or equal to" ₹7,500. Hotels sometimes price a category at ₹7,499 or ₹7,500 for this reason.

3. Per room, per day. A three-night stay billed at ₹21,000 is ₹7,000 a day and attracts 5%. Two rooms at ₹5,000 each are two units at ₹5,000, not one supply of ₹10,000. A suite sold at ₹15,000 is one unit above ₹7,500, so 18%.

4. Each room sale is judged on its own. A hotel with standard rooms at ₹4,500 and suites at ₹11,000 charges 5% on the standard rooms and 18% on the suites. The same room can attract different rates on different nights if its price moves across the line.

Since the rate turns on price, hotels that use dynamic pricing need their property-management system to apply the rate per room-night, and their invoices need to show the value per day clearly. If a guest's bill for a ₹7,800 room shows 5%, the hotel has under-charged and will owe the difference itself.

Worked hotel bills

Each line on a hotel bill is taxed at its own rate. The bills below show how a stay adds up in a mid-range hotel (no room sold above ₹7,500 last year) and in a luxury hotel.

Bill 1 — two nights in a ₹4,500 room, mid-range hotel in Jaipur

Before 22 September 2025, the room would have carried 12% — ₹1,080 instead of ₹450 — so the same stay cost ₹630 more. Because the hotel is in Rajasthan and the stay is in Rajasthan, the ₹450 appears as ₹225 CGST and ₹225 SGST.

Bill 2 — two nights in a ₹12,000 room, five-star hotel in Mumbai

The spa line reflects another GST 2.0 change: beauty and physical well-being services — spas, salons, gyms and the like — moved from 18% to 5% (no ITC).

Working backwards from an inclusive tariff. A booking site that shows ₹6,300 "including taxes" for a room in the 5% band contains ₹6,300 × 5 ÷ 105 = ₹300 of GST on a ₹6,000 room. One showing ₹9,440 for a room above the line contains ₹9,440 × 18 ÷ 118 = ₹1,440 of GST on ₹8,000.

Restaurants, room service and breakfast in hotels

A hotel's restaurant rate depends on whether the hotel is a specified premises. From 1 April 2025, Notification 05/2025–Central Tax (Rate) defines it by looking back at the previous financial year: a hotel is a specified premises for the current year if it supplied any unit of accommodation at a value above ₹7,500 per unit per day in the preceding financial year. The old link to a "declared tariff" was dropped.

A hotel below that line can opt in by filing a declaration — Annexure VII for existing registrants, between 1 January and 31 March for the next financial year, or Annexure VIII within 15 days of the acknowledgement (ARN) of a new registration application. A hotel can opt out for the next year with Annexure IX. The 56th GST Council added explanations confirming that a standalone restaurant cannot declare itself a specified premises.

Room service is a restaurant service, so it follows the hotel's restaurant rate. Breakfast included in the room tariff is part of a composite supply in which the room is the principal supply, so the package is generally taxed at the room's rate. A ₹7,000 "room with breakfast" package is taxed at 5%; a ₹9,000 one at 18%. For more on restaurant rates, see our guide to GST on food.

Banquets, weddings and conference halls

Events in hotels mix several services, and the rate depends on how they are bundled and where.

• Composite catering with the venue — food served together with the hall, lawn or banquet room for a function — is taxed at 5% (no input tax credit) when the venue is not a specified premises, and at 18% with ITC when it is one. A wedding package in a hotel that sold rooms above ₹7,500 last year therefore attracts 18%.
• Hall or lawn rental alone, without catering, is renting of premises at 18%.
• Outdoor catering sent by the hotel to another venue follows the same 5%/18% split depending on whether the hotel is a specified premises.
• Decoration, sound, lighting and event management billed separately are services at 18%.

Wedding example. A ₹5,00,000 catering-and-hall package at a five-star hotel carries ₹90,000 of GST at 18%. The same package at a marriage hall that isn't part of a specified premises carries ₹25,000 at 5%. The five-star hotel can offset its credits; the marriage hall cannot, so its pre-tax price has to cover the GST it pays on its own purchases.

What "without ITC" means for hotel owners

For guests, the cut from 12% to 5% is simple savings. For hotels, it comes with a cost: the 5% rate applies on condition that the hotel does not take credit of input tax charged on goods and services used in supplying those rooms. GST paid on linen, toiletries, furniture, renovation, housekeeping contracts, software and OTA commissions used for 5% rooms is no longer recoverable — it becomes part of the hotel's costs.

Hotels with only 5% rooms stop claiming ITC on room-related costs. The Council's FAQs say credit already availed can be used for supplies up to 21 September 2025, and the CGST Act's reversal rules apply to supplies after that date where inputs are used for supplies without credit.

Hotels with both 5% and 18% rooms have to split their credits. Costs used only for 18% rooms or the specified-premises restaurant are fully creditable; costs used only for 5% rooms are not; common costs — the lobby, lifts, power, security, the property-management system — are apportioned each month under section 17 and Rules 42 and 43, based on the share of turnover from each type of supply, with a final adjustment after the year ends.

Should a hotel price around the line? A ₹7,500 room carries ₹375 of GST and no credit; an ₹8,000 room carries ₹1,440 with credit. A hotel with heavy input costs — a new property paying GST on construction-related services and fit-out — may recover more by staying above the line on its premium categories. A small guest house with low input costs gains more from the 5% rate. Run the numbers on your own cost base before you change tariffs.

Registration and the threshold. A guest house or homestay must register once its aggregate turnover crosses ₹20 lakh (₹10 lakh in special category states). Below that, it charges no GST on direct bookings — but bookings through apps are a different story.

Bookings through travel apps and OTAs

Section 9(5) of the CGST Act lets the government make an e-commerce operator pay the tax on certain services supplied through it. Notification 17/2017–Central Tax (Rate) applies this to accommodation in hotels, inns, guest houses, clubs, campsites and other commercial places meant for lodging — except where the person supplying the accommodation through the platform is liable for registration under section 22(1).

Who pays GST on an app booking

Step 1

Guest books a room on an app

price includes GST

Step 2

Is the hotel liable to register?

turnover above the threshold

Step 3

Yes → hotel charges GST

platform collects TCS

Step 4

No → platform pays GST

section 9(5)

So for a registered hotel above the threshold, the hotel charges and pays GST on the room as usual, and the platform deducts tax collected at source (TCS) of 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) from what it pays the hotel, under section 52. The hotel claims the TCS as a credit in its electronic cash ledger. For a small homestay or guest house below the threshold, the platform pays the 5% or 18% on the room itself, and the host receives the room price without GST.

Two more pieces of the app booking are taxed separately. The platform's convenience or service fee to the guest is its own service at 18%. Its commission charged to the hotel is also a service at 18% — and for a hotel whose rooms are all at 5% without ITC, that commission GST is now a cost it cannot recover. A hotel paying a 15% commission on a ₹5,000 room pays ₹750 plus ₹135 of GST to the platform, and the ₹135 stays on its books, which makes direct bookings slightly more valuable than before.

ITC for business travellers

A registered business can claim the GST on a hotel stay used for business — the "without ITC" condition on 5% rooms restricts the hotel's credit, not the guest's. But three rules limit it in practice.

• Same-state registration. Section 12(3) of the IGST Act makes the place of supply of hotel accommodation the location of the hotel. The bill therefore carries CGST and SGST of that state, and you can claim them only through a GST registration in that state. A Mumbai company's employee staying in a Chennai hotel generates Tamil Nadu tax that the company can use only if it is registered in Tamil Nadu.
• Food and holidays are blocked. Section 17(5)(b) blocks credit on food and beverages, outdoor catering and travel benefits extended to employees on vacation, subject to narrow exceptions. Keep the room and the restaurant bills separate so the room credit isn't lost along with the food.
• Your GSTIN on the bill. Give the hotel your GSTIN and legal name at check-in; a bill in an employee's name without the GSTIN gives no credit.

Checking a hotel bill

0/6

• Room rate per night shown — 5% if up to ₹7,500, 18% if above
• Discounted price, not the rack rate, used for the rate test
• Restaurant charges at 5% or 18% depending on whether the hotel is a specified premises
• Spa, salon or gym at 5%; laundry and other services at 18%
• Business stay: your GSTIN and legal name on the invoice
• Business stay: hotel in a state where your business is registered

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Common mistakes on hotel GST

• Still charging 12% on rooms up to ₹7,500. Any room-night supplied on or after 22 September 2025 is at 5%. If a guest was overcharged, issue a credit note and correct the return; GST collected in excess must be paid to the government if it is not refunded to the guest.
• Testing the rack rate instead of the price charged. A ₹9,000 published rate sold at ₹7,200 is a 5% room. The reverse is also true: a ₹7,000 category sold at ₹8,000 on a peak night is an 18% room.
• Claiming ITC on costs used for 5% rooms. Credits on linen, amenities and OTA commissions for 5% rooms have to be left unclaimed or reversed; claiming them invites a demand with interest at 18% a year.
• Forgetting the specified-premises look-back. One suite sold above ₹7,500 in the previous financial year moves the hotel's restaurant to 18% for the whole of the current year. Check the previous year's highest room value every April.
• Double-taxing app bookings. A small homestay whose app bookings are taxed by the platform under section 9(5) must not charge GST again on the same booking; it reports those sales in its return as supplies on which the operator paid tax, if it is registered.

Official links

• 56th GST Council recommendationsHotel accommodation 5% without ITC up to ₹7,500
• PIB FAQs on GST rate rationalisationNo 18% option for rooms up to ₹7,500
• CGST (Rate) notificationsNotification 11/2017 heading 9963 as amended
• Notification 17/2017–CT(Rate)E-commerce operators paying tax on accommodation
• Section 17, CGST ActApportionment and blocked credits
• Section 12, IGST ActPlace of supply of hotel accommodation

What to do next

Travellers: check the per-night price on your bill against the ₹7,500 line and use the GST calculator to see the tax inside an inclusive tariff. Hotel owners: re-test your specified-premises status at the start of each financial year, decide on any declaration before 31 March, and review your ITC split between 5% and 18% rooms with your accountant. For restaurant and catering rates, see GST on food; for the credit conditions, our input tax credit guide.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the GST rate on hotel rooms in 2026?

Since 22 September 2025, hotel rooms with a value of up to ₹7,500 per unit per day attract 5% without ITC, down from 12% with ITC. Rooms priced above ₹7,500 a day attract 18% with ITC. The test is the actual price charged for the room per day, after discounts, not the published rack rate.

Is a ₹7,500 hotel room taxed at 5% or 18%?

A room priced at exactly ₹7,500 a day is taxed at 5%. The lower rate covers accommodation with a value 'less than or equal to' ₹7,500 per unit per day, so 18% starts only above ₹7,500. A room sold at ₹7,500 carries ₹375 of GST; one sold at ₹8,000 carries ₹1,440.

Is there GST on hotel rooms below ₹1,000?

Yes. Rooms below ₹1,000 a day were exempt until 17 July 2022. The 47th GST Council withdrew that exemption, and such rooms were taxed at 12% from 18 July 2022. From 22 September 2025 they attract 5% without ITC. A ₹900 room now carries ₹45 of GST. Hotels below the registration threshold cannot charge GST.

Who pays GST when I book a hotel on an app like MakeMyTrip or OYO?

If the hotel is registered and above the threshold, the hotel charges GST and the platform only collects TCS. If the hotel is not liable to register — typically a small guest house or homestay — section 9(5) makes the platform pay the GST on the room as if it were the hotel. The platform's own convenience fee carries 18%.

Can a business claim ITC on a hotel stay?

Yes, for business travel, if the invoice shows your GSTIN. The 5% 'without ITC' condition restricts the hotel's own credit, not yours. But hotel GST is CGST and SGST of the state where the hotel is, so you can claim it only through a registration in that state. GST on food and on holiday travel for employees is generally blocked under section 17(5)(b).

What is the GST on food in a hotel restaurant?

It depends on the hotel. If any room in the hotel was sold above ₹7,500 a day in the previous financial year, or the hotel opted in, its restaurant is in a 'specified premises' and charges 18% with ITC. Otherwise its restaurant charges 5% (no input tax credit). Room service follows the same rate as the hotel's restaurant.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Recommendations of the 56th GST Council meeting (press release with annexures) — GST Council / PIB · accessed 7 October 2026
2. 2.FAQs on the decisions of the 56th GST Council — PIB · accessed 7 October 2026
3. 3.Notification 17/2017–Central Tax (Rate) — services where e-commerce operators pay tax (GST Council copy) — GST Council · accessed 7 October 2026
4. 4.CGST (Rate) notifications — Notification 11/2017 as amended — GST Council · accessed 7 October 2026
5. 5.Section 17 – CGST Act, 2017 (apportionment and blocked credits) — CBIC · accessed 7 October 2026
6. 6.Section 12 – IGST Act, 2017 (place of supply where both parties are in India) — CBIC · accessed 7 October 2026
7. 7.Latest GST amendments for the hotel industry and restaurants — TaxGuru · accessed 7 October 2026
8. 8.CGST rate on accommodation, food and beverage services (heading 9963) — GSTGyaan · accessed 7 October 2026
9. 9.Industry reacts to GST Council decision to levy 12% tax on rooms under Rs 1,000 — BW Hotelier · accessed 7 October 2026