GST on Hospitality Services

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GST on Hospitality Services ranges between 5% and 18%, depending on room tariff and service type. This includes hotel accommodation, restaurant services, catering, and travel-related hospitality offerings under SAC 9963. You encounter this when running a hotel, restaurant, or tourism business, or when booking rooms and dining services. This hotel GST structure directly affects pricing, billing, and compliance. The 56th GST Council revised these rates, confirming the current slabs and ITC rules.

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GST Rate on Hospitality Services at a Glance

GST on hotel rooms and restaurants varies based on tariff and type of service.

This structure helps you manage room booking GST, pricing, and billing decisions.
Hotel GST is 5% for room tariffs up to ₹7,500 per night, with no ITC available.
GST rate is 18% for rooms above ₹7,500, where ITC is allowed on inputs.
GST on restaurants is 5% without ITC for standalone restaurants. Only restaurants operating within specified premises — such as those attached to hotels charging above ₹7,500 per night — may charge 18% with ITC. A standalone restaurant cannot declare itself a specified premises to access the 18% ITC option.
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Rate by Hospitality Service Type: Quick Reference

The table below shows GST implications across key hospitality services.

  1. Service Category

    1. Hotel rooms ≤₹7,500
    2. Hotel rooms >₹7,500
    3. Restaurants (standalone)
    4. Catering / specified premises

  2. GST Rate

    1. 5%
    2. 18%
    3. 5%
    4. 18%

  3. What It Means for You

    1. Lower pricing but no ITC recovery.
    2. Higher GST but allows ITC claims.
    3. Simple billing with no input credit.
    4. ITC eligibility improves cost recovery.
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What the Rate Means for Your Purchase Cost

GST directly affects your total hotel or dining bill. If a hotel room costs ₹6,000, GST at 5% adds ₹300, making the total ₹6,300. For frequent travellers or business bookings, this impacts overall travel and accommodation expenses.

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What the Rate Means for Your Purchase Cost

GST directly affects your total hotel or dining bill. If a hotel room costs ₹6,000, GST at 5% adds ₹300, making the total ₹6,300. For frequent travellers or business bookings, this impacts overall travel and accommodation expenses.

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How to Calculate GST on Hospitality Services

To calculate GST on hospitality services, multiply the base tariff by the applicable rate.

Total bill = Base Price × (1 + GST rate).

For example, a hotel room priced at ₹6,000 results in ₹6,300 after 5% GST. This excludes service charges, convenience fees, and optional add-ons.

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Impact of GST on Hospitality Services Prices

The GST structure directly influences pricing across hotels and restaurants.

Hotels, restaurants, and travel service providers benefit the most.
Lower 5% GST supports affordability in budget hotels and dining.
Higher 18% GST allows ITC, improving margins for premium operators.
Standardised tax improves transparency in restaurant billing and hotel invoices.
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Input Tax Credit (ITC) on Hospitality Services

ITC on hospitality services depends on the GST slab applied.

This affects your net cost and pricing strategy.
You can claim ITC if services are taxed at 18% under specified premises.
ITC is not available for services taxed at 5%.
Your business must be GST-registered and engaged in taxable supply.
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GST Benefits for Hospitality Service Providers

The GST framework offers operational advantages.

Lower GST supports growth in budget travel and lodging segments.
ITC availability improves profitability for premium hotels.
Simplified tax structure supports hotel compliance GST processes.
Encourages expansion in tourism and travel services.
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Why GST Matters for Your Hospitality Service Pricing

Understanding GST on cars helps you make smarter financial decisions. Before buying, always check the GST slab for cars, add car insurance GST, and calculate road tax separately. This gives a realistic idea of your total ownership cost.

Before pricing or booking, you should:
This helps you optimise pricing and maintain compliance.
Check room tariff thresholds for correct GST slab.
Verify whether ITC is applicable to your service model.
Review billing structure for restaurants and catering services.
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GST Reforms 2.0 on Hospitality Services

The 56th GST Council, held on 3 September 2025, reduced GST on hotel accommodation up to ₹7,500 per unit per day from 12% to 5%, effective 22 September 2025. Restaurants outside specified premises were confirmed at 5% without ITC. The Council also clarified that a standalone restaurant cannot declare itself a specified premises and cannot access the 18% GST with ITC option. This simplified billing but removed input credit benefits for standalone restaurant operators.

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Additional Costs to Consider

GST is only one component of your total hospitality cost.

You should calculate these separately to estimate your total cost.
Liquor licence fees (varies by state).
Trade licence and municipal approvals.
Fire safety and compliance certification.
Property tax and operational overheads.
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Disclaimer: GST rates are based on the 56th GST Council notification effective September 2025. Rates are subject to revision. Always verify the latest applicable rates from the CBIC official website before making a purchase decision.

FAQs

What is GST on hotel rooms?
GST on hotel rooms is 5% for tariffs up to ₹7,500 and 18% above that. The applicable rate depends on the declared room tariff. ITC is available only at 18%.
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Do restaurants charge GST?
Yes, standalone restaurants charge GST at 5% without ITC. Only restaurants operating within specified premises — typically attached to hotels with room tariffs above ₹7,500 — may charge 18% with ITC. A standalone restaurant cannot opt into the 18% ITC structure under the rules clarified by the 56th GST Council.
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Can hotels claim ITC?
Yes, hotels can claim ITC if they operate under the 18% GST slab. ITC is not available for rooms taxed at 5%. This affects pricing and cost recovery.
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What is GST on catering?
GST on catering services is generally 18% with ITC. This applies to event catering and services in specified premises. It allows businesses to offset input costs.
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Is GST applicable on homestays?
Yes, GST applies to homestays if they exceed the threshold and charge room tariffs. The rate follows the same slab as hotels. Smaller operators below threshold may be exempt.
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Disclaimer:

Shriram Finance strives to provide accurate and timely information about its products and services on its website and related platforms. Details mentioned here may vary from institution to institution and based on the customer profile. The content presented is intended for general informational purposes only and should not be considered a substitute for official product or service documentation. In cases of discrepancy, the terms specified in the official product or service documents will take precedence. Users are encouraged to consult with qualified professionals before making any decisions based on the information provided. Please review our Disclaimer page for detailed terms and conditions before making any financial decisions.

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