If you are wondering how to start a homestay business, the good news is that you probably already own the hardest part: the house. A homestay in India is a home where the owner lives and lets a few rooms to travellers, usually with breakfast and local food. It needs far less money than a hotel, but it still needs registration, sensible pricing and a way to get bookings. This guide takes you through each step, from checking whether your house qualifies to running the place day to day.
What counts as a homestay in India
There is no single national definition. Each state sets its own through a homestay scheme run by the state tourism department, and the definitions share a few common points:
- The owner lives on site. Kerala gives classification only where the owner and family physically live in the house. Karnataka requires the owner, spouse or children to be resident. Uttarakhand asks for permanent residents living with their family. West Bengal's 2026 policy is more relaxed: the owner, a family member or a designated relative may live there.
- A small number of rooms. Most schemes allow one to six rooms. Karnataka also caps beds at 12, allows no more than three beds in a room and bans dormitories and bunk beds. West Bengal allows up to eight rooms in rural areas.
- Your own home, not a rented one. Kerala, Karnataka and West Bengal exclude leased or rented premises.
If you do not live on site, or you plan more rooms than your state allows, you are probably looking at a bed and breakfast, guest house or small hotel instead, each with its own rules. If you plan dorm beds for backpackers, read our guide to running a hostel in India.
Is a homestay a good idea for you?
A homestay works well when three things line up: travellers already come to your area, you enjoy having guests in your home, and someone in the family has time every day. Guests expect to be welcomed, fed and helped with plans. That is the product.
Run the numbers before you spend. Suppose you have three rooms and set a rate of ₹2,500 a night including breakfast:
| Room-nights available per month | 3 rooms × 30 nights = 90 |
|---|---|
| At 50 per cent occupancy | 45 room-nights |
| Room revenue per month | 45 × ₹2,500 = ₹1,12,500 |
| Less booking site commission, if half come through them at 18 per cent | about ₹10,125 |
From the rest you pay for food, laundry, power, staff help and upkeep. Season matters: a hill station may be full in May and quiet in the monsoon. Use a cautious occupancy for your first year.
Be honest about the time it takes. Someone has to answer enquiries quickly, often late in the evening, cook breakfast early, clean rooms between guests and be at home for arrivals. Many families share the work: one person handles bookings and messages, another the kitchen and rooms. If no one can be at home on most days, a homestay will be hard to run well, and most state schemes expect you to live there anyway.
Start small. Open the rooms you already have, learn what guests ask for, and invest in more only once the first season shows demand.
How to start a homestay business: costs and setup
The cost to start depends mostly on the state of your rooms. The usual list:
- Rooms: good mattresses, clean linen (at least three sets per bed), curtains that block light, a wardrobe or hooks, a reading lamp and charging points near the bed.
- Bathrooms: an attached bathroom for each room where you can. Karnataka's guidelines call it desirable. Hot water, good water pressure and clean fittings matter more than décor.
- Safety: fire extinguishers, a first-aid kit and emergency numbers on display. Karnataka requires CCTV at the reception with 30 days of footage, and West Bengal lists a fire extinguisher as a minimum standard.
- Connectivity: reliable Wi-Fi is now expected, even in the hills.
- Kitchen: Karnataka requires homestays to serve breakfast, and Kerala asks that food be prepared for guests on request.
- Photos: good daylight photographs of every room and the view. They do more for bookings than any other single spend.
Spend first on beds, bathrooms and cleanliness. Guests forgive a simple room, not a dirty one.
Licences and registration
Register with your state tourism department before you take paying guests. In Karnataka, operating without registration is illegal, and Uttarakhand's scheme makes registration mandatory. Registration can also bring benefits, such as domestic rates for electricity and water in Karnataka and West Bengal.
Registration in Kerala, Karnataka, Himachal Pradesh and Uttarakhand
- Kerala: apply online to the Department of Tourism for classification as Diamond, Gold or Silver. Up to six rooms, owner resident. The fee is ₹3,750, valid for three years.
- Karnataka: register under the 2025 guidelines with the district committee chaired by the Deputy Commissioner. One to six rooms, 12 beds, valid for five years.
- Himachal Pradesh: register under the Himachal Pradesh Home Stay Rules, 2025 with the Department of Tourism and Civil Aviation. Check the current fee, which depends on your area and number of rooms.
- Uttarakhand: register through the state homestay portal under the Deen Dayal Upadhyay home stay scheme. One to six rooms, owner living with family, outside municipal corporation areas.
Our guide to homestay registration in India covers nine states in detail, with the documents to prepare.
Depending on your state and services, you may also need food safety registration if you serve meals, and permission from your housing society if you live in a flat. Ask your local body what applies.
Pricing your rooms
Start from what similar homestays nearby charge on booking sites for the same dates, then adjust for what you offer: view, meals, privacy, parking. A few rules of thumb:
- Price by season. Set a weekday rate, a weekend rate and a peak rate for holidays and festivals. Change them at least monthly.
- Include breakfast in the rate so the price guests see is the price they pay.
- Set a minimum stay of two nights on peak weekends, so one-night bookings do not block better ones.
- Take a deposit at booking, for example one night's rate, by UPI. It discourages no-shows.
Keep your rate the same on every booking site and on your own channels. A guest who finds you cheaper on an app learns not to book you directly.
Getting bookings: booking sites and direct
Most new homestays get their first guests through booking sites (OTAs) such as Airbnb, Booking.com, MakeMyTrip and Agoda. They bring travellers who would never find you otherwise, in return for a commission. Our guide to listing your property on booking sites covers setting up a strong listing.
The more guests you win directly, the more you keep:
- Google Business Profile. Add your homestay to Google Maps with photos, a phone number and a WhatsApp link. See list your hotel on Google.
- WhatsApp. Reply fast with availability, a price and a UPI payment link.
- Repeat guests. Ask happy guests to book directly next time. Every return booking made directly carries no commission. Read how to cut OTA commission.
When you list on more than one site, keep a single calendar. A double booking in a three-room homestay means turning away a family at your own front door.
GST basics for a homestay
GST applies to room stays, but small homestays may not need to register. Under the GST Council's 2017 decision, service providers, including those selling through e-commerce platforms, need not register while their aggregate turnover stays within ₹20 lakh a year (₹10 lakh in some special category states). Even at 60 per cent occupancy all year, three rooms at ₹2,500 come to about ₹16,42,500, still below the threshold. Add a fourth room or raise your rates, and you could cross it.
Once registered, rooms with a tariff up to ₹7,500 a night are taxed at 5 per cent without input tax credit, as of November 2026. When you are below the threshold, the booking site may be the one that pays GST on stays sold through it. Confirm how this applies to you with your chartered accountant, and read our guides to GST on hotel rooms and TDS and TCS on OTA payouts.
Foreign guests and Form C
If a foreign national stays with you, you must report the stay to the immigration authorities within 24 hours of arrival. The form used to be called Form C; it is now Form-III. It applies to homestays just as it does to hotels, and West Bengal's 2026 policy repeats the 24-hour duty for registered homestays.
Register your property on indianfrro.gov.in before your first foreign booking, not on the night the guest arrives. Our guide to Form-III for hotels explains the steps.
How to run a homestay business day to day
Running a homestay is a daily rhythm more than a business plan:
- Before arrival: confirm the booking on WhatsApp, share directions and your house rules, and ask for ID details.
- At check-in: check ID for every adult, record the stay in your guest register, and show guests the room, Wi-Fi and meal times. Our hotel check-in procedure guide covers the basics.
- During the stay: breakfast on time, rooms cleaned daily, and a family member reachable by phone.
- At checkout: settle the bill, give a proper invoice if a guest asks, and ask for a review.
- Every week: check your calendars, rates and reviews, and restock linen and supplies.
Keep a guest register for every stay. Karnataka's guidelines require one, with ID copies for Indian guests and passport details for foreign guests.
GuestHawk lets you run a homestay from your phone: one calendar for Airbnb, Booking.com and direct bookings, deposits by UPI, and guest ID and Form-III completed before arrival. See GuestHawk for homestays or our pricing.
Frequently asked questions
Is a homestay legal in India?
Yes, when it is registered under your state's scheme. Karnataka's 2025 guidelines treat an unregistered homestay as illegal, and Uttarakhand's scheme makes registration mandatory. See homestay registration in India for each state.
How many rooms can a homestay have?
Most state schemes allow one to six rooms. Kerala and Karnataka set six as the maximum, and Karnataka also caps beds at 12. West Bengal's 2026 policy allows up to eight rooms in rural areas. Check your own state's current rules.
Do I need to live in the house to run a homestay?
In most states, yes. Kerala, Karnataka and Uttarakhand require the owner and family to live on the premises. If you do not, you may fall under a bed and breakfast or guest house category instead.
Do I need GST registration for a homestay?
Service providers generally need to register once aggregate turnover crosses ₹20 lakh a year (₹10 lakh in some special category states). Confirm the current threshold and how it applies to stays sold through booking sites with your chartered accountant. Rates are in our GST guide.
Is a homestay a good idea?
It can be, if the house is in a place travellers already visit, you enjoy hosting and you have time for daily work. Run the numbers with a cautious occupancy first, and start with the rooms you already have.
Sources
- Kerala Tourism: guidelines and classification of homestays
- Karnataka Tourism Department: Government Order on homestay guidelines, 2025
- Uttarakhand Tourism Development Board: homestay scheme eligibility criteria
- West Bengal Tourism: Homestay Policy 2026
- CBIC: GST Council recommendations at its 23rd meeting, Guwahati, 10 Nov 2017
- CBIC: GST – An Update (as on 1 May 2019)
- Bureau of Immigration: Indian FRRO online services (Form-III reporting)
- The Tribune: Himachal tourism department lays down strict norms for homestay units