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Hotel GST changed in September 2025, and many small hotels, guest houses and homestays are still quoting the old 12% rate. Wrong tax on a bill confuses guests and creates trouble at return-filing time. Here is how it works now.
The current room rates
| Room value per night | GST | Input tax credit |
|---|---|---|
| Up to ₹7,500 | 5% | Not available |
| Above ₹7,500 | 18% | Available |
These rates apply from 22 September 2025 under the GST 2.0 rationalisation. Earlier, rooms between ₹1,001 and ₹7,500 attracted 12% with credit.
What "without ITC" means for you
At 5%, you cannot claim credit for GST you paid on linen, furniture, renovation, software or OTA commissions for those rooms. The guest pays less tax, but your own costs effectively rise a little.
- If almost all your rooms sell under ₹7,500, plan for this cost in your pricing
- If you sell some rooms above ₹7,500, ask your CA how to split credit between the two types
The rate is decided per room night
The slab depends on the value charged for the unit per day, not your printed "rack rate". A deluxe room listed at ₹8,000 but sold at ₹7,200 after discount usually falls under 5%. Keep your invoice clear: room rate, discount, taxable value, GST.
Food, banquets and extras
Restaurant service, banquet halls and other add-ons have their own rules. Do not apply the room rate to everything on the folio. A good billing tool helps; see our comparison of GST billing software.
Showing tax on your website and OTAs
- State clearly whether prices include GST
- Update rate plans on Booking.com, MakeMyTrip and Agoda so the tax setting matches the new slab
- On your own hotel website, show the final price before payment. Surprise taxes at checkout kill direct bookings.
Registration
If your turnover crosses the GST threshold you must register and file returns. Homestays below the threshold may not need to, but OTAs may still ask for your GST status.
FAQs
Is a ₹999 room exempt from GST?
No. The old exemption for rooms under ₹1,000 ended in 2022. Today such rooms fall in the 5% slab, but GST applies only if you are registered or required to be.
Do I charge GST on the extra-bed charge?
Generally it is part of the accommodation value for that night, so it counts towards the slab.
This is general information, not tax advice. Confirm with your CA for your hotel.
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