GST on Hotel Rooms in India
Hotel rooms attract 5% GST in India when the tariff is up to ₹7,500 per night, and 18% GST above that. The 5% rate is mandatory and comes without input tax credit for the hotel.
Working out the GST on hotel rooms
The rate turns on the room tariff, and the calculator below uses 5% — the rate up to ₹7,500 a night, charged without input tax credit. Above ₹7,500 it is 18% with credit available. Multiply the taxable value by 5 percent to get the GST, then add it to the base price for the total.
- For an intra-state sale, the 5% splits into 2.5% CGST and 2.5% SGST.
- For an inter-state sale, a single 5% IGST applies instead.
- The calculator on this page is pre-set to the 5% rate and handles both cases.
A worked example
Suppose a hotel room has a taxable value of ₹5,000 before tax. Applying 5% GST works out as follows.
GST on hotel room rent: below and above ₹7,500
The 56th GST Council cut mid-range accommodation from 12% to 5% effective 22 September 2025, but attached a condition: the lower rate comes without input tax credit, and it is mandatory rather than optional. A hotel cannot elect to charge 18% in order to keep its credit.
| Room tariff per night | GST rate | Input tax credit |
|---|---|---|
| Up to ₹7,500 | 5% (was 12%) | Not available |
| Above ₹7,500 | 18% (unchanged) | Fully available |
On a ₹6,000 room the tax falls from ₹720 to ₹300, about ₹420 a night cheaper. That is a real saving for the mid-market segment where most domestic and corporate travel sits.
Put plainly, because this is how most people ask it: hotel room rent below ₹7,500 a night is 5% GST, and above ₹7,500 a night it is 18%. The threshold is judged per room per night, not on the total bill, so three nights at ₹6,000 stay at 5% even though the bill comes to ₹18,000. Other lines on a hotel bill — restaurant food, laundry, the minibar — follow their own rates rather than the room rate.
You will still find pages saying rooms under ₹1,000 a night are exempt. They are out of date. That exemption was withdrawn with effect from 18 July 2022 by Notification 04/2022-Central Tax (Rate), so a ₹800 room is taxable at 5% like everything else up to ₹7,500. Budget properties that never registered because they believed themselves exempt are the ones most often caught by this.
The no-ITC catch for hoteliers
Cutting the rate to 5% sounds like pure good news, but for the hotel it is a trade. At 5% the property cannot claim credit on laundry, food procurement, outsourced services or capital goods attributable to those rooms, so that GST becomes a real cost absorbed into pricing. A hotel running rooms on both sides of the ₹7,500 line has to apportion its credit under Section 17 and Rules 42 and 43, reversing the portion attributable to the 5% rooms. That is a genuine compliance burden, and it is why some hoteliers were less enthusiastic about the cut than guests were.
Discounts, and which number sets the rate
This used to be genuinely contested and is now settled. Until July 2022 the rate followed the declared tariff, so a room published at ₹8,000 but sold at ₹7,000 still attracted the higher rate. From 18 July 2022 the concept of declared tariff was removed from the rate notifications and replaced by the value of supply, meaning the amount actually charged. The same discounted room therefore now falls in the 5% bracket on its ₹7,000 price. This matters for revenue management, because a rack rate above ₹7,500 no longer drags the higher rate onto a discounted booking. Cancellation charges are taxed at the same rate as the original booking.
The specified premises rule for hotel restaurants
Here is where hotels differ sharply from standalone restaurants. A hotel is specified premises if any room exceeded ₹7,500 per night in the previous financial year, or if it voluntarily declares itself so. At specified premises, the restaurant charges 18% with ITC. At non-specified premises it charges 5% without ITC. The consequence is that two restaurants serving an identical menu can carry different tax rates purely because of the room tariffs upstairs, and the rule applies even to a walk-in diner who is not staying at the hotel.
Packages, banquets and business travel
A stay-plus-meals package is normally a composite supply taxed at the accommodation rate, since the room is the principal supply. But bundle in genuinely unrelated items such as a car rental or a gym voucher and it can become a mixed supply, taxed at the highest rate among the components. Banquet and event services generally attract 18%. For a business traveller, ITC on the stay is available only where the room was taxed at 18%, meaning above ₹7,500; on a 5% room there is no credit to claim regardless of the business purpose.
Frequently asked questions
Rooms with a tariff up to ₹7,500 per night attract 5% GST without input tax credit, reduced from 12% on 22 September 2025. Rooms above ₹7,500 attract 18% with full ITC available to the hotel.
No. The 5% rate is mandatory for rooms up to ₹7,500 per night. A hotel cannot choose to charge 18% in order to claim input tax credit on those rooms.
Sources differ on this. The older approach applied the rate to the declared tariff regardless of discount, while more recent guidance indicates the rate follows the actual amount charged, which would mean a discounted room can fall into a lower slab. Confirm the current position for your booking or property.
Because of the specified premises rule. If any room in the hotel exceeded ₹7,500 per night in the previous financial year, the hotel's restaurant charges 18% with ITC. Otherwise it charges 5% without ITC. The rule applies even to diners who are not staying at the hotel.
Only where the room was taxed at 18%, meaning a tariff above ₹7,500 per night. On rooms taxed at 5% there is no credit available regardless of whether the travel was for business.