GST on Hotel Rooms in India: Rates, Slabs and Invoices

GST on a hotel room looks simple: there are two rates. The work is in applying them, because the rate depends on what each night is sold for, and the same guest's stay, breakfast and dinner can each be taxed differently. This guide covers the rules as they stand in October 2026. It is general information, not tax advice, so confirm how they apply to your property with your chartered accountant.

The current GST rates on hotel rooms

Since 22 September 2025, room accommodation is taxed in two slabs, based on the value of the room per unit per day:

• Up to ₹7,500 a night: 5% GST, without input tax credit
• Above ₹7,500 a night: 18% GST, with input tax credit

Before that date, rooms up to ₹7,500 were taxed at 12%. The 5% rate is not optional: a hotel can't choose to charge 18% on a lower-priced room in order to keep its input tax credit. Rooms under ₹1,000 a night, which were exempt until July 2022, fall in the 5% slab too.

How the ₹7,500 threshold is applied

The slab is decided by the amount actually charged for the room for that night, not by the published rack rate. A room listed at ₹9,000 and sold at ₹7,000 after a discount is taxed at 5%. This has been the rule since October 2019, when 'declared tariff' was replaced by the value of supply.

It is also decided night by night. If a room sells for ₹6,500 on weekdays and ₹8,500 on Saturday, the weekday nights are taxed at 5% and the Saturday night at 18%, on the same invoice. Averaging the stay, or taxing the whole bill at the higher rate, are both wrong. Charges that are part of the room's price, such as an extra bed, generally count towards that night's value, so a room close to the threshold can cross it.

Input tax credit: what the 5% slab costs you

At 5% the guest pays less tax, but the hotel can't claim credit for the GST it pays on the purchases behind those room nights. A hotel that sells rooms in both slabs has to split the credit on shared costs, such as rent, power and repairs, and reverse the part that relates to its 5% rooms. Your accountant does this calculation when filing, and it needs room revenue broken down by slab, which is one more reason to get the slab right on every night.

Restaurant, room service and packages

Food is taxed separately from the room. A hotel restaurant charges 5% without input tax credit, unless the hotel is a 'specified premises', in which case it charges 18% with credit. Since 1 April 2025, a hotel is a specified premises for the financial year if it sold any room above ₹7,500 a night in the previous financial year, or if it has filed a declaration opting in. Room service follows the same rule as the restaurant.

A room sold with meals at one price, such as a CP, MAP or AP plan, is normally treated as a composite supply with accommodation as the main part, so the whole package is taxed at the room's rate. Liquor is outside GST and is taxed under state law, so it needs to be kept apart on the bill. Banquets depend on what is being supplied (hall hire, catering or a package), so settle the treatment with your accountant before you quote.

CGST and SGST, even for out-of-state guests

For accommodation, the place of supply is where the hotel is. A hotel in Kerala therefore charges CGST and SGST to every guest, including a company registered in Karnataka. It does not charge IGST. The practical effect is that an out-of-state company usually can't claim credit for the tax on its employees' hotel stays, which is a question corporate bookers often raise at checkout.

What a hotel GST invoice needs

• The hotel's name, address and GSTIN
• A consecutive invoice number and the date
• The guest's name and, for a company booking, the company's name and GSTIN
• Each charge with its SAC code; room accommodation is 996311
• The taxable value, rate and CGST and SGST amounts for each line
• An IRN and QR code, if the hotel is covered by e-invoicing and the invoice is to a registered business

E-invoicing applies to businesses with a turnover above ₹5 crore, for B2B invoices. Advances matter too: for services, GST is due when an advance is received, so a banquet or group deposit needs a receipt voucher and has to be adjusted against the final invoice.

Bookings from OTAs

The hotel still issues the GST invoice for an OTA booking, on the amount the guest paid for the room. The OTA charges the hotel GST at 18% on its commission. Where the OTA collects the guest's payment, it also deducts TCS under Section 52 and reports it against the hotel's GSTIN, which the hotel then claims back when filing. Reconciling this each month needs every booking tagged with the OTA it came from.

Common mistakes

• Using the rack rate, rather than the amount charged, to pick the slab
• Taxing a whole stay at one rate when its nights fall in different slabs
• Charging IGST to a company from another state
• Leaving the company's GSTIN off a B2B invoice, so it has to be reissued
• Still charging 12% from an old tax setting
• Not raising a receipt voucher for an advance
• Claiming input tax credit in full when some rooms are sold at 5%
• Mixing liquor into the GST invoice

Small hotels and homestays

GST registration is required once annual turnover crosses ₹20 lakh (₹10 lakh in some special category states). Below that, where a booking comes through an OTA, the OTA is generally liable to pay the GST on it. Ask your accountant which applies to you, and see our page on homestay software.

Quick answers

• GST on a hotel room up to ₹7,500 a night: 5%, without input tax credit
• GST on a hotel room above ₹7,500 a night: 18%, with input tax credit
• The slab is set by the amount charged for each night, after discounts
• Rooms are always billed CGST + SGST, never IGST
• SAC code for room accommodation: 996311

Letting the PMS do it

None of this should depend on the receptionist remembering the rules at checkout. StaySynq's GST billing applies the slab to each room night as it posts, carries SAC codes and the CGST and SGST split on every line, generates the e-invoice for B2B bills and exports the invoice register and HSN/SAC summary for GSTR-1. Rates and thresholds are settings, so the next change is an update rather than a rebuild. See everything StaySynq does for hotels in India.