For most Indian properties, GST is the single tax question that comes up at every check-out. The rate on a room depends on the tariff, the rate on food depends on where it is served, and whether you can claim input tax credit (ITC) depends on both. Getting it wrong means either overcharging guests or absorbing tax you did not collect.
This is a plain-English overview as of November 2026. It is not tax advice. Rates and conditions change, so settle the details for your property with your chartered accountant.
GST on hotel rooms
From 22 September 2025, accommodation is taxed in two bands, set by the tariff per unit per night:
| Room tariff per unit per night | GST rate | Input tax credit |
|---|---|---|
| Up to ₹7,500 | 5% | Not available |
| Above ₹7,500 | 18% | Available |
Before this change, rooms up to ₹7,500 were taxed at 12%. The lower rate is good news for guests, but it comes without ITC, so the GST you pay on supplies and services for those rooms becomes a cost to the business. Properties whose rooms were all at or below ₹7,500 had to reverse their ITC balance when the change took effect.
The band is decided by the value you charge for the unit for that night, not by the rack rate printed on a card. A room sold at ₹7,200 one night and ₹8,000 the next falls in different bands on each night.
Properties with rooms in both bands
Many hotels sell some rooms or some nights below ₹7,500 and others above it. In that case you charge 5% or 18% night by night, and the ITC on your common costs, such as electricity, linen or software, has to be apportioned between the taxable supplies that allow credit and those that do not. The apportionment method is a matter for your CA, and it needs clean data on which nights fell in which band.
GST on restaurants and room service
Restaurant service follows a separate rule:
- Standalone restaurants, and restaurants in hotels that are not "specified premises", charge 5% without ITC.
- Restaurants in specified premises charge 18% with ITC. Broadly, specified premises are hotels that supply rooms at a tariff above ₹7,500 a unit per night.
The exact test for specified premises, including which period's tariffs count and any option to declare your premises, should be confirmed with your CA, because it decides the rate on every food bill in the building.
Food and drink delivered to a room, and banqueting, raise their own questions of classification. Agree with your CA how each is treated, then set it up once in your billing system so the desk never has to decide at check-out. Alcoholic drinks for human consumption are outside GST and are taxed under state law.
Tax invoices that hold up
A correct GST invoice for a stay or a meal should show, at a minimum:
- your legal name, address and GSTIN;
- a unique invoice number and the date;
- the SAC (services accounting code) for each line, such as accommodation or restaurant service;
- the taxable value, the rate and the tax amount, split between CGST and SGST or shown as IGST as applicable;
- for business guests, the guest company's name, address and GSTIN.
B2B and B2C. A corporate guest who gives you a GSTIN needs an invoice in their company's name to claim credit, and it must be raised that way at the time, not corrected later. Walk-in and leisure guests receive a B2C invoice.
E-invoicing. If your aggregate turnover is above ₹5 crore, e-invoicing has applied since 1 August 2023: B2B invoices must be registered on the Invoice Registration Portal and carry an IRN and QR code. Once you cross the threshold in any year, it continues to apply. Since 1 April 2025, businesses with turnover of ₹10 crore or more must report each invoice within 30 days of its date. Growing properties can reach the threshold sooner than expected, so check your turnover each year.
Staying compliant without the paperwork
The GST rules are workable once the system does the deciding. Set the band per night from the actual tariff, apply the right restaurant rate for your premises, capture the guest's GSTIN at booking, and keep invoices and expenses in one place so your CA can file and reconcile quickly.
GuestHawk produces GST-correct invoices from the folio, with the right rate for each night and each outlet. See billing on GuestHawk, and if you also host foreign guests, read Form-III for hotels.
Frequently asked questions
What is the GST on a hotel room under ₹7,500?
As of November 2026, rooms with a tariff up to ₹7,500 per unit per night are taxed at 5% without input tax credit. Rooms above ₹7,500 are taxed at 18% with input tax credit.
Can I claim input tax credit on rooms taxed at 5%?
No. The 5% rate on rooms up to ₹7,500 comes without input tax credit. If you also sell rooms above ₹7,500, ask your CA how to apportion credit on common costs.
What GST does a hotel restaurant charge?
A restaurant in specified premises, broadly a hotel with room tariffs above ₹7,500 a night, charges 18% with input tax credit. Other restaurants charge 5% without credit. Confirm with your CA how the test applies to your hotel.
Does my hotel need e-invoicing?
E-invoicing applies to businesses with aggregate turnover above ₹5 crore, for B2B invoices. Once the threshold is crossed in any year, it continues to apply. Check your turnover with your CA.
Is this guide tax advice?
No. It is a general overview as of November 2026. Rates and conditions change, so confirm the treatment for your property with your chartered accountant.