The Goods and Services Tax (GST) has been an influential imposition in India for the hospitality sector, unfirming and simplifying tax structures. It is essential for hotel owners, restaurant operators, and consumers alike to gain knowledge about how GST gets applied for both hotel accommodations and food services. Following the structured approach, an activity may attract a different hotel restaurant GST rates depending on which room tariff slab it falls under and service type by restaurant.
GST Rates on Hotel Room Tariffs
The GST rates on hotel accommodations are based on room tariffs per night, and different slabs apply to different price ranges. Below are the prevailing rates:
- Room Tariff Below ₹1,000 per Night: No GST is applicable. This means budget hotels offering rooms under ₹1,000 per night are exempt from GST.
- Room Tariff Between ₹1,001 and ₹7,500 per Night: A GST rate of 12% is applied to this category.
- Room Tariff Above ₹7,500 per Night: A GST rate of 18% is levied on luxury hotels charging above ₹7,500 per night.
These rates were revised to simplify taxation in the hospitality sector and remove multiple indirect taxes such as service tax, VAT, and luxury tax, making it more structured and transparent.
GST Rate on Hotel Room Tariff – Quick Summary – Hotel room tariff per night
| Hotel Room Tariff (Per Night) | Applicable GST Rate |
| Below ₹1,000 | No GST |
| ₹1,001 – ₹7,500 | 12% GST |
| Above ₹7,500 | 18% GST |
HSN Code for Hotel Room Rent
The Harmonized System of Nomenclature (HSN) is a globally recognized coding system used for classifying goods and services. The HSN code assigned to hotel accommodation services is 9963. This code helps in the proper categorization of hotel services and simplifies tax compliance.
GST on Restaurant Services in Hotels
The GST rate on restaurant services within a hotel is linked to the hotel’s room tariff. This creates two different tax structures for food and beverage services:
- Hotels with Room Tariff Below ₹7,500 per Night: Restaurants in such hotels are taxed at 5% GST without Input Tax Credit (ITC).
- Hotels with Room Tariff Above ₹7,500 per Night: Restaurants are taxed at 18% GST, but they can claim ITC.
This means that luxury hotels with higher room tariffs charge higher GST on food and beverages than smaller hotels and standalone restaurants.
Restaurant GST Rate in Hotels – Quick Summary
| Hotel Room Tariff (Per Night) | GST Rate on Restaurant Services | Input Tax Credit (ITC) Available? |
| Below ₹7,500 | 5% GST | No ITC |
| Above ₹7,500 | 18% GST | Yes, ITC Available |
Input Tax Credit (ITC) Implications
Under the GST system, businesses can claim Input Tax Credit (ITC) to offset tax paid on inputs against tax payable on final services. However, the eligibility for ITC varies depending on the GST rate applied to hotel and restaurant services:
- Hotels and Restaurants Charging 5% GST: Not eligible for ITC.
- Hotels and Restaurants Charging 18% GST: Eligible for ITC.
This differentiation influences pricing strategies, as hotels charging 18% GST can reduce their tax burden by claiming ITC on their input costs, while those under the 5% GST category cannot.
Every Hotels & Restaurants will need to mention proper HSN of hotel or restaurant services at the time of processing of a new application of GST registration online at GST portal.
Industry’s Demand to Delink Restaurant GST from Hotel Tariff
Industry bodies and hotel associations have been advocating for the separation of GST rates on food and beverage services from hotel room tariffs. The argument is that restaurants within hotels should not have their tax rates determined by the hotel’s room price, as this leads to operational and compliance challenges.
Many hoteliers argue that a uniform tax rate on food services, regardless of hotel tariffs, would streamline taxation and prevent customer confusion. They propose a flat 5% GST rate on restaurant services, irrespective of the hotel’s room category.
Recent Developments in Hotel GST Rates
As of 2025, no major changes have been made to the GST rates on hotel accommodations and restaurant services. However, discussions are ongoing about revising tax structures to make the system more business-friendly. The hospitality industry has repeatedly urged the government to lower GST rates to boost tourism and encourage more travel and stays in premium hotels.
How to Calculate GST on Hotel Rooms?
Calculating GST on hotel room tariffs is simple. The GST amount is determined by multiplying the room tariff by the applicable GST rate. Here’s an example:
Example 1: Hotel Room Tariff ₹6,000 per Night
- GST Rate: 12%
- GST Amount = ₹6,000 × 12% = ₹720
- Total Cost to Customer = ₹6,000 + ₹720 = ₹6,720
Example 2: Luxury Hotel Room Tariff ₹10,000 per Night
- GST Rate: 18%
- GST Amount = ₹10,000 × 18% = ₹1,800
- Total Cost to Customer = ₹10,000 + ₹1,800 = ₹11,800
Conclusion
Understanding GST rates on hotel rooms and restaurant services is crucial for both hotel operators and customers. The GST system in India categorizes hotel accommodations into different slabs, with 0%, 12%, and 18% GST rates depending on room tariffs. Restaurants within hotels follow different tax structures based on the hotel’s tariff category.
The industry is calling for a uniform GST rate for restaurant services to simplify taxation and remove the dependency on hotel room tariffs. While no significant changes have been made in recent years, discussions continue regarding revising GST slabs to support the hospitality sector.
For businesses, staying compliant with GST regulations and ensuring correct invoicing is essential for smooth operations. By understanding how GST applies to hotel rooms and food services, hoteliers can price their offerings competitively while remaining tax-compliant.
Navigating GST on hotel accommodation and restaurant services can be complex, but Kcorp Tax simplifies it for you! Whether you’re a hotel owner or restaurant operator, our expert team ensures accurate GST compliance, proper tax calculations, and seamless filings to help you avoid penalties. From understanding GST slabs on hotel room tariffs to determining applicable GST on food services, we provide end-to-end tax solutions tailored to your business needs. Stay compliant and maximize savings with Kcorp Tax – your trusted partner in GST advisory.
Frequently Asked Questions (FAQs)
1. What is the GST rate for budget hotels charging less than ₹1,000 per night?
Budget hotels with a room tariff below ₹1,000 per night are exempt from GST and do not need to charge any tax on their room rates.
2. What is the GST rate for mid-range hotels charging between ₹1,001 and ₹7,500 per night?
Hotels charging between ₹1,001 and ₹7,500 per night are subject to 12% GST on their room tariffs.
3. What is the GST rate for luxury hotels charging above ₹7,500 per night?
Luxury hotels with room tariffs above ₹7,500 per night attract 18% GST.
4. Can hotels charge 18% GST on food and beverages?
Yes, but only if the hotel’s room tariff exceeds ₹7,500 per night. Otherwise, restaurant services are taxed at 5% GST without ITC.
5. What is the HSN code for hotel room rent?
The HSN code for hotel accommodation services is 9963.
6. Are standalone restaurants subject to the same GST rates as hotel restaurants?
No, standalone restaurants are taxed at 5% GST without ITC, while restaurants in luxury hotels (above ₹7,500 room tariff) are taxed at 18% GST with ITC.
7. Is GST applicable on extra services like laundry and spa in hotels?
Yes, additional services such as laundry, spa, and conference room rentals attract 18% GST, regardless of the room tariff.
8. How is GST calculated on hotel bookings?
GST is calculated by multiplying the room tariff by the applicable GST rate. The final price includes the base tariff and the GST amount.
9. Do hotels have to issue separate GST invoices for food and lodging?
Yes, hotels must issue separate invoices for room charges and food & beverage services if different GST rates apply.
10. Has there been any recent update on GST rates for hotels?
As of 2025, no major changes have been implemented. However, industry leaders continue to push for tax revisions to support the hospitality sector.
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