GST Rate On Hotel Rooms in India: GST Slab Rates From 12% to 5% [2026]

The latest GST Rate On Hotel Rooms in India changes introduced from 22 September 2025 have made it important for hoteliers to revisit their tax configuration, especially around the 5% GST and 18% GST slabs for hotel accommodation.

A guest books a hotel room for ₹7,500 today.

Tomorrow, the same room is sold for ₹7,600.

The difference is only ₹100 — but the GST treatment may change completely.

For hotels, GST is not just about applying a tax percentage at checkout. Room rates change every day due to demand, seasonality, OTA promotions, corporate contracts and dynamic pricing strategies. Without the right understanding and billing configuration, hotels can face incorrect invoices, reconciliation challenges and compliance risks.

This complete guide covers the updated new GST rate on hotel room rent in India, calculation examples, ITC impact, billing requirements and how hotels can use connected PMS technology to manage GST workflows more efficiently.

Important: This guide is for general informational purposes and reflects GST information available at the time of publication. GST notifications, interpretations and compliance requirements can change. Hotels should confirm their specific tax treatment with current CBIC/GST notifications and a qualified GST or tax professional before configuring rates, claiming ITC or filing returns.

New GST Rate on Hotel Room Rent in India (Updated 2026)

The new GST rate on hotel room rent in India depends on the value of accommodation supplied per unit per day.

After the GST rate changes effective from 22 September 2025, hotels need to apply the following structure:

For example:

Hotel room rent: ₹6,000 per day

Applicable GST:

₹6,000 × 5% = ₹300

Guest pays:

₹6,300

Hotel room rent: ₹9,000 per day

Applicable GST:

₹9,000 × 18% = ₹1,620

Guest pays:

₹10,620

The GST rate is determined by the value of accommodation supplied, not simply by:

• Hotel star category
• Property size
• Location
• Brand positioning

A luxury hotel offering a room below the applicable threshold may fall under the 5% category, while a smaller property selling accommodation above ₹7,500 may fall under the 18% category.

Hotels should therefore ensure their PMS, reservation system and billing workflowsare configured according to the applicable GST rules rather than using fixed assumptions based on property type.

Why This GST Change is Important for Hotels?

The revised GST structure impacts more than guest invoices.

Hotels need to review:

Room Pricing Strategy

Dynamic pricing can move the same room between GST categories.

Example:

Corporate Bookings

Business travelers often require:

• GST invoices
• Correct GSTIN details
• Tax breakup
• Company billing information

Incorrect configuration can create invoice corrections and reconciliation issues.

OTA Bookings

Hotels receiving reservations from:

• Booking.com
• Expedia
• Agoda
• MakeMyTrip

need to ensure that:

• Room value
• Discounts
• Taxes
• Payments
• Settlement reports

are accurately reconciled.

Hotel Billing Systems

Manual GST calculations become difficult when hotels manage:

• Multiple room categories
• Seasonal rates
• Promotions
• Corporate contracts
• Packages
• Additional services

A connected PMS helps hotels maintain consistency between:

Reservation → Room Rate → Tax Configuration → Guest Folio → GST Invoice

What Has Been Changed Hotel GST in India From 22 September 2025?

Until 21 September 2025, hotel accommodation with a value up to ₹7,500 per unit per day generally attracted 12% GST with ITC.

From 22 September 2025, that rate changed to:

5% GST without ITC

for hotel accommodation valued at ₹7,500 or less per unit per day.

Accommodation above ₹7,500 continues to fall under the 18% GST category.

Hotel GST Rate Change at a Glance

For hotels, the rate reduction can make the tax charged to guests lower on rooms within the ₹7,500 category, but the loss of ITC changes the cost and accounting implications for the hotel.

That means hoteliers should not evaluate the change only as:

“GST fell from 12% to 5%.”

The more complete business question is:

“How does the lower output tax rate combined with the restriction on input tax credit affect our hotel’s costs, pricing and margins?”

Hotels with multiple room categories may also need to deal with supplies falling under different tax treatments.

Is GST Still Exempt on Hotel Rooms Below ₹1,000?

No. This is one of the most important outdated GST claims still appearing in hotel tax content online.

The exemption previously available for low-value hotel accommodation was withdrawn from 18 July 2022.

Therefore, under the current post-22 September 2025 rate structure, hotel accommodation valued at:

₹1,000 or less per unit per day

does not become GST-exempt merely because it falls below ₹1,000.

It falls within the accommodation category of:

₹7,500 or less → 5% GST without ITC

For example:

Room value: ₹900

GST at 5%:

₹900 × 5% = ₹45

Total including GST:

₹945

This distinction is particularly important for:

• Budget hotels
• Guest houses
• Hostels
• Lodges
• Economy accommodation
• Small independent properties

Hoteliers should review older tax configurations if their billing systems still treat accommodation below ₹1,000 as exempt.

How Is GST Calculated on Hotel Room Tariff?

The basic hotel GST calculation is straightforward once the correct taxable value and GST rate have been determined.

Formula

GST Amount = Taxable Value × Applicable GST Rate

Then:

Total Guest Amount = Taxable Value + GST

Here are some examples.

Example 1: Hotel Room at ₹3,000

Room value:

₹3,000

Applicable GST:

GST:

₹3,000 × 5% = ₹150

Total:

₹3,150

Example 2: Hotel Room at ₹5,000

Room value:

₹5,000

GST at 5%:

₹5,000 × 5% = ₹250

Total payable:

₹5,250

Example 3: Hotel Room at Exactly ₹7,500

Room value:

₹7,500

The value is still within the “₹7,500 or less” category.

GST:

₹7,500 × 5% = ₹375

Total:

₹7,875

Example 4: Hotel Room at ₹8,000

Room value:

₹8,000

The accommodation value is now above ₹7,500.

GST:

₹8,000 × 18% = ₹1,440

Total:

₹9,440

Why the ₹7,500 Threshold Matters

Consider two rooms:

Room A

₹7,500

GST = 5%

GST amount = ₹375

Total = ₹7,875

Room B

₹7,501

GST = 18%

GST amount = ₹1,350.18

Total = ₹8,851.18

A difference of ₹1 in the underlying accommodation value can therefore place the supply in a different GST rate category.

For revenue and front-office teams, this is why the relationship between room pricing, applicable GST configuration and hotel billing deserves careful attention.

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Is Hotel GST in India Calculated on Rack Rate or the Actual Room Value?

Hotels often publish one rate and sell the same room at another.

For example:

Published room rate: ₹8,500

Promotional selling price: ₹7,000

This creates an important GST question:

Which value determines the tax treatment?

Modern hotel GST rules use the value of supply rather than the old “declared tariff” concept for determining the accommodation rate.

However, determining the correct value of supply can become more complicated where the booking includes:

• Discounts
• Mandatory charges
• Packages
• Complimentary services
• Corporate contracts
• OTA-funded promotions
• Hotel-funded promotions

Hotels should therefore avoid creating a blanket rule that says:

“Always calculate GST using the rack rate.”

Likewise, do not assume every discount automatically changes the taxable value.

The transaction needs to be evaluated under applicable GST valuation rules.

Simple Illustration

Suppose:

Published room rate = ₹8,000

Hotel-approved discount = ₹1,000

Eligible taxable value after discount = ₹7,000

If that ₹7,000 is the value of supply under the applicable GST rules, the accommodation would fall within the ₹7,500-or-less category.

But because discount structures can differ, hotels should have their tax professional validate how their specific promotions and contracts should be treated.

GST on Hotel Rooms Up to ₹7,500

The largest accommodation category affected by the September 2025 change is hotel accommodation with a value of ₹7,500 or less per unit per day.

The applicable rate is:

5% GST without ITC

Hotels supplying accommodation within this category do not have the option simply to charge 18% so they can claim ITC.

The 5% without-ITC treatment is mandatory for qualifying accommodation.

This affects properties across multiple segments:

• Budget hotels
• Mid-market hotels
• Business hotels
• Resorts
• Independent hotels
• Hotel chains

The tax treatment follows the accommodation value rather than a simplistic label such as “budget hotel” or “four-star hotel.”

For example, a premium hotel could sell a room for ₹7,000 on a low-demand date.

That particular accommodation supply may fall into the 5% category even though the property itself is positioned as an upscale hotel.

GST on Hotel Rooms Above ₹7,500

When the value of hotel accommodation is above ₹7,500 per unit per day, the applicable GST rate is generally:

18%

This category also has a different ITC treatment from accommodation taxed at 5%.

For example:

Room value = ₹12,000

GST:

₹12,000 × 18% = ₹2,160

Total:

₹14,160

The rate does not become 18% merely because:

• The property is a five-star hotel
• It calls itself a luxury hotel
• It is located in an expensive destination
• The guest is a corporate traveler

The value of the accommodation supply is the key rate threshold.

This distinction matters for properties using dynamic hotel pricing, where the same room could be sold below ₹7,500 on one night and above ₹7,500 on another.

How Does Input Tax Credit (ITC) Work for Hotels After the GST Change?

Input Tax Credit (ITC) allows eligible GST-registered businesses to offset qualifying GST paid on inputs and input services against their output GST liability, subject to GST law and applicable conditions.

The September 2025 accommodation changes created an important distinction.

Accommodation at ₹7,500 or Less

GST:

ITC:

Not available for the inputs/input services used in supplying that accommodation, subject to the prescribed restriction.

Hotels cannot voluntarily select:

18% + ITC

for accommodation that falls within the mandatory 5% category.

Accommodation Above ₹7,500

GST:

18%

ITC can be available subject to the normal eligibility requirements, restrictions and documentation under GST law.

Why Mixed-Rate Hotels Need More Attention

Consider a resort that sells:

Standard Room: ₹6,500

Premium Room: ₹8,500

The hotel may therefore make accommodation supplies falling under both:

5% without ITC

and

18% with eligible ITC

That can make the treatment of common inputs and input services more complicated.

Hotels may need to identify:

• Inputs used exclusively for 5% supplies
• Inputs used for eligible taxable supplies
• Common input services
• Appropriate ITC reversals/apportionment

This is an accounting and tax-compliance area where hotels should involve their CA or GST adviser rather than relying entirely on automated software settings.

How Dynamic Hotel Pricing Can Change the GST Rate

This is where hotel GST becomes an operational issue rather than simply an accounting issue.

Modern hotels rarely sell every room at one fixed rate.

Rates can change according to:

• Occupancy
• Demand
• Day of week
• Season
• Local events
• Booking window
• Competitor pricing
• Corporate agreements
• OTA promotions
• Last-minute demand

Consider the same room across three nights.

The physical room has not changed.

The value of the accommodation supply has.

This is why hotel tax configuration needs to work correctly alongside:

• Rate management
• Reservations
• Packages
• Discounts
• Billing
• PMS workflows

Hotels using spreadsheets or manually calculating GST should pay particular attention to rate changes around the ₹7,500 threshold.

What Happens When a Guest Stays Multiple Nights at Different Room Rates?

Consider a three-night stay:

Night 1

Room value = ₹7,000

GST rate = 5%

GST = ₹350

Night 2

Room value = ₹7,500

GST rate = 5%

GST = ₹375

Night 3

Room value = ₹8,000

GST rate = 18%

GST = ₹1,440

The hotel’s billing workflow needs to account correctly for the applicable value and tax treatment rather than blindly applying one rate to the total stay.

This becomes especially important for:

• Dynamic rates
• Weekend rates
• Seasonal pricing
• Extended stays
• Rate-plan changes
• Room upgrades

Hotels should have their specific billing logic validated against applicable GST rules.

GST on Hotel Room Discounts and Promotional Rates

Hotels routinely offer:

• Early-bird discounts
• Last-minute discounts
• Corporate rates
• Member rates
• OTA promotions
• Seasonal offers
• Coupon discounts
• Long-stay rates

Suppose:

Standard selling rate = ₹8,000

Eligible discount = ₹1,000

Resulting taxable value under applicable valuation rules = ₹7,000

The GST category could differ from the category applicable to an ₹8,000 taxable value.

But there is an important caveat.

Not every discount arrangement is identical.

For example:

Hotel-funded discount

may have different commercial mechanics from:

OTA-funded coupon

or:

Post-supply discount

or:

Corporate contracted rate

Therefore, front-office and revenue teams should not manually alter tax rates based only on the amount the guest appears to pay on an OTA confirmation.

The hotel’s accounting treatment should follow the actual transaction and applicable GST valuation rules.

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GST on Hotel Restaurant and Room Service in India

Hotel GST becomes more complicated when the guest uses services beyond accommodation.

A typical stay may contain:

Room

Breakfast

Restaurant

Room Service

Laundry

Spa

The GST treatment of restaurant services should not simply be copied from the accommodation rate.

Restaurant services have their own GST framework, including rules concerning specified premises.

From April 2025, the specified-premises framework was changed so that the restaurant-service treatment can depend on the relevant accommodation-value conditions in the preceding financial year and available declaration mechanisms.

As a result, hotels should not rely on outdated rules such as:

“Restaurant GST automatically changes every time tonight’s room rate crosses ₹7,500.”

Hotel restaurant GST needs to be configured according to the current specified-premises rules applicable to that property and financial year.

This is particularly important for:

• Hotels with restaurants
• Resorts
• Multi-outlet properties
• Banquet hotels
• Properties offering room service

GST on Hotel Packages: Room + Breakfast + Other Services

Hotel packages are commercially attractive but can create additional tax questions.

Examples include:

Package A

Room + breakfast

Package B

Room + breakfast + airport transfer

Package C

Room + dinner + spa

Package D

Room + event ticket + meals

Hotels need to determine whether the arrangement involves:

• Separate supplies
• Composite supply
• Mixed supply
• A principal supply with ancillary components

The GST treatment can depend on how the package is structured and supplied.

For example, a hotel should not automatically split a single package into artificial components merely to obtain a lower tax rate.

Likewise, it should not automatically apply the room GST rate to every additional service without checking the applicable treatment.

Hotels offering packages should have their package configurations reviewed by a GST professional and then ensure those approved configurations are reflected correctly in the PMS and billing system.

GST on Banquets, Conferences and Hotel Events in India

Hotels increasingly earn revenue beyond room nights.

Revenue can come from:

• Banquet halls
• Weddings
• Conferences
• Meetings
• Catering
• Corporate events
• Venue hire

Consider a wedding package containing:

Banquet Hall

Food

Decoration Coordination

Accommodation

The tax treatment cannot necessarily be determined simply by looking at the room GST slab.

Hotels need to evaluate:

• Nature of the supply
• Whether supplies are bundled
• Catering treatment
• Premises classification
• Applicable GST notifications
• Invoice structure

This is another reason hotel billing is more complicated than ordinary retail invoicing.

GST on Corporate Hotel Bookings in India

Corporate travel introduces additional billing requirements.

A business traveler may book a room through:

• Company travel desk
• Travel management company
• OTA
• Hotel website
• Direct corporate contract

The hotel may need to capture information such as:

• Company name
• Billing address
• GSTIN
• Guest name
• Reservation details
• Taxable value
• Tax breakup
• Invoice number
• Applicable place-of-supply details

The payer may also differ from the guest.

For example:

Company pays: Room + breakfast

Guest pays: Minibar + spa

The hotel needs to route charges correctly and issue the appropriate invoices according to its validated billing workflow.

Businesses considering ITC should also ensure the invoice and underlying supply meet applicable GST requirements rather than assuming every hotel expense automatically qualifies for credit.

CGST, SGST and Place of Supply for Hotel Accommodation

Hotel accommodation is directly connected with immovable property.

For domestic transactions, the place of supply for lodging accommodation provided by a hotel is generally the location of the hotel/property under the IGST Act’s immovable-property rules.

Consider:

Guest/company location: Delhi

Hotel location: Karnataka

The fact that the customer is located in Delhi does not automatically make the hotel accommodation an inter-state service for billing purposes.

The location of the accommodation property is central to determining the place of supply.

This is especially important for:

• Corporate travel
• Centralized company bookings
• Travel agencies
• Multi-state hotel groups
• GST invoice configuration

Hotels should ensure their invoicing workflow is configured according to their registered entities, property locations and applicable place-of-supply rules.

What Should a GST Hotel Invoice Include?

A hotel GST invoice needs more structure than a simple receipt showing:

Room: ₹5,000 Tax: ₹250 Total: ₹5,250

Depending on the transaction and applicable invoice requirements, relevant information can include:

• Hotel/legal entity name
• Address
• GSTIN
• Unique invoice number
• Invoice date
• Guest/customer details
• Customer GSTIN where applicable
• Description of service
• SAC
• Taxable value
• Applicable GST rate
• CGST/SGST or other applicable tax breakup
• Total invoice value

Hotel invoices can become considerably more complicated when a stay includes:

• Room charges
• Restaurant charges
• Room service
• Laundry
• Spa
• Minibar
• Discounts
• Deposits
• Advance payments
• Refunds
• Corporate billing

That is why GST hotel billing should be treated as a completereservation-to-invoice workflow, not simply a tax calculation at checkout.

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GST on Hotel Bookings Through OTAs

OTAs add another layer to hotel billing.

A typical workflow looks like:

Guest Searches Online

Books Through OTA

Reservation Reaches Hotel

Hotel Recognizes Booking

Guest Stays

Hotel Generates Applicable Invoice

Hotel Reconciles OTA Settlement

The hotel may need to deal with:

• Room value
• OTA promotions
• Hotel-funded discounts
• OTA-funded discounts
• Commission
• Tax treatment of commission/services
• Guest invoice
• OTA settlement
• Reservation modifications
• Cancellations

One common mistake is assuming:

“The amount appearing on the OTA booking confirmation is all the finance team needs.”

Hotels should reconcile:

Reservation Value

Applicable Taxes

Payments

OTA Commission/Charges

Settlement

Hotel Accounting Records

A PMS,channel manager and accounting workflow can reduce repeated data entry, but the hotel’s tax treatment still needs to be configured according to applicable law.

Common GST Billing Mistakes Hotels Should Avoid

GST errors often happen because tax rules meet complex hotel operations.

Here are some practical problems hotels should watch for.

1. Still Charging the Old 12% Accommodation Rate

Hotel accommodation of ₹7,500 or less moved to 5% without ITC from 22 September 2025.

Properties should ensure legacy tax configurations have been updated.

2. Treating Rooms Below ₹1,000 as GST-Exempt

The old exemption was withdrawn in 2022.

Under the current rate structure, these rooms fall within the 5% without-ITC accommodation category.

3. Applying 18% at Exactly ₹7,500

The 5% category applies where the accommodation value is less than or equal to ₹7,500.

18% applies when it is above ₹7,500.

4. Using Hotel Star Rating to Determine Room GST

The accommodation rate is not simply:

“Budget = 5%”

“Luxury = 18%”

The applicable accommodation value matters.

5. Ignoring Dynamic Pricing

The same room can move across the ₹7,500 threshold as demand changes.

6. Applying Accommodation GST to Every Hotel Service

Restaurant, banquet, spa and other services may have different tax treatments.

7. Incorrect Corporate GST Details

Incorrect customer information can create reconciliation and ITC problems for corporate customers.

8. Incorrect Treatment of Packages

Room + meals + services may require proper analysis rather than one tax rate being applied automatically.

9. Manual Tax Calculation

Repeated manual calculations increase the opportunity for errors, particularly at properties with high transaction volumes.

10. Assuming Software Decides Tax Law

A PMS can apply configured tax rules consistently.

It does not replace a CA or tax professional.

The hotel first needs to determine the correct tax treatment and then configure its system accordingly.

How Hotels Can Manage GST Billing More Efficiently

A useful hotel billing workflow should connect the complete guest journey.

Reservation

Room Rate

Applicable Tax Configuration

Advance Payment

Check-In

Room Charges

POS / Additional Charges

Guest Folio

Payment

GST Invoice

Reporting / Accounting

When these activities happen in separate systems or spreadsheets, hotel teams may spend more time:

• Re-entering information
• Checking tax calculations
• Matching POS charges
• Correcting invoices
• Reconciling payments
• Resolving guest disputes

A hotel PMS can provide a more connected operational foundation.

How Hotel PMS Software Can Help With GST Hotel Billing

A modern hotel property management system (PMS) can bring reservations, guest folios, room charges, taxes, payments and reports into one operational workflow.

For Indian hotels, useful billing capabilities to evaluate include:

Tax Configuration

The system should allow hotels to configure applicable taxes according to the property’s approved tax setup.

Guest Folios

Room and relevant additional charges should be visible within the guest billing workflow.

POS Integration

Where a hotel’s restaurant POS is integrated, eligible restaurant or service charges can be posted to the guest folio.

Discounts

Approved discounts should flow correctly into the billing process.

Corporate Billing

Hotels should be able to handle company information and more complex payment instructions.

Advance Payments

Advances should be tracked and adjusted correctly according to the hotel’s configured process.

Split Billing

Properties frequently need to separate:

Company Charges

from

Guest Personal Charges

Invoice Generation

The billing system should generate structured invoices based on the hotel’s configured tax and invoice setup.

Reports

Management and finance teams need access to billing and transaction information for reconciliation and accounting workflows.

Hotels evaluating their billing workflow can also read our detailed guide to GST hotel billing software in India, which explains guest folios, POS transactions, corporate billing, advances, refunds, invoice workflows and what hotels should test before choosing a system.

How Hotelogix Can Help Hotels Manage GST Billing Workflows

For hotels, GST compliance does not begin when the receptionist clicks “Print Invoice.”It starts much earlier.

A guest might:

Book a Room

Pay an Advance

Change the Reservation

Check In

Order Food

Use the Spa

Receive a Discount

Split the Bill Between Company and Guest

Check Out

That entire journey can affect billing.

With Hotelogix, we connect core hotel operations such as reservations, front desk, guest folios, billing, POS-related workflows, payments and reporting within the PMS environment.

Manage Reservations and Billing Together

Our PMS connects reservation information with the operational stay, reducing the need for staff to maintain separate reservation and billing records.

Configure Hotel Taxes

Hotelogix provides tax-management capabilities, including support for slab-tax configurations and GST-related workflows.

The hotel’s applicable tax structure should first be validated with its GST adviser and then configured accordingly.

Bring POS Charges Into the Guest Folio

Support Corporate and Complex Billing Workflows

Indian hotels frequently manage:

• Company bookings
• Group reservations

ITC