Few things confuse hotel front desks — and annoy guests at checkout — like GST. Is the room 5% or 18%? Does a discount change the slab? Why is the restaurant bill taxed differently from the room? Get it wrong and you either overcharge guests (disputes, refunds) or undercharge the government (notices, interest, penalties at filing time).
Here is the 2026 position, in plain language, with worked examples you can hand to your front office. (One caveat: this is operational guidance, not tax advice — confirm specifics with your CA.)
The Two Slabs
- Room priced ₹7,500 or below per night → 5% GST, without input tax credit (ITC).
- Room priced above ₹7,500 per night → 18% GST, with ITC.
Two details matter more than the percentages:
1. It is the transaction value, not the declared tariff. The slab is decided by what the guest actually pays for that night — after discounts. A ₹8,000 rack-rate room sold at ₹7,200 is a 5% night.
2. It is per unit, per night. A property can issue 5% invoices for its standard rooms and 18% invoices for its suites in the same week. And a peak-season price rise can push the same room across the threshold — the invoice must follow the price, night by night.
Worked Examples
Example 1 — Standard room, ₹4,000/night × 2 nights
- Room charges: ₹8,000
- GST @ 5%: ₹400 → CGST ₹200 + SGST ₹200
- Invoice total: ₹8,400
Example 2 — Suite, ₹9,000/night × 1 night
- Room charge: ₹9,000 (above ₹7,500 → 18% slab)
- GST @ 18%: ₹1,620 → CGST ₹810 + SGST ₹810
- Invoice total: ₹10,620
Example 3 — Discount changes the slab
- Rack rate ₹8,500, corporate discount 15% → guest pays ₹7,225
- ₹7,225 ≤ ₹7,500 → 5% slab applies: GST ₹361.25
- Invoice total: ₹7,586.25 — not ₹8,525.50 at 18%. Billing 18% here overcharges the guest by nearly ₹940.
F&B Inside the Hotel
Restaurant GST follows the hotel's status, not the diner's room. If any accommodation unit in your property crossed ₹7,500/night in the previous financial year, you are a "specified premises" — your restaurant bills 18% with ITC. Below that, the restaurant bills 5% without ITC. When a dinner is posted to a guest's room, the folio must carry the room night at its slab andthe F&B line at its own slab — one invoice, two tax treatments, correctly split into CGST and SGST.
The Mistakes That Trigger Notices
- Billing the declared tariff's slab after a discount — the most common overcharge (see Example 3).
- One blended GST line for room + food — room and F&B are different supplies at (often) different rates; they must be separate line items.
- Charging IGST to out-of-state corporate guests — accommodation is always CGST + SGST of the hotel's state.
- Season pricing crossing ₹7,500 unnoticed — the rate calendar moves, the invoice template doesn't, and every peak-season invoice is short-taxed at 5%.
- Hand-typed GST math at checkout — a tired 11 PM calculation on a multi-night, multi-slab folio with an advance adjustment is where errors live.
GST that computes itself
Arinon Hotel Software picks the right slab per night from the actual rate, splits CGST/SGST on every folio line — rooms and F&B — and gives you a downloadable GST report your CA will actually thank you for.
See GST-ready billingWhat Your PMS Should Do For You
None of this should be front-desk mental math. A modern PMS applies the slab from the actual nightly rate, keeps room and F&B lines separate with their own rates, splits CGST/SGST automatically, recomputes when a discount is applied, and produces a period GST report — output tax by slab, ready for your GSTR filing. During the night audit, charges post with the correct tax before the day locks, so the books your CA sees are the books your guests were billed from.
FAQs
What is the GST rate on hotel rooms in India in 2026?
Two slabs apply, based on the actual price charged per unit per night (transaction value): rooms at ₹7,500 or below attract 5% GST without input tax credit; rooms above ₹7,500 attract 18% GST with input tax credit. The rate is decided per night per room, not by the hotel's category or star rating.
Is GST on hotel rooms charged on declared tariff or actual price?
On the actual transaction value — the price the guest really pays after discounts — not the printed or declared tariff. If your rack rate is ₹8,000 but the guest pays ₹7,000 after a discount, the 5% slab applies to that night.
What GST rate applies to restaurant bills inside a hotel?
It depends on the room tariff of the hotel. If any unit of accommodation in the property was priced above ₹7,500 per night in the preceding financial year, the hotel is a 'specified premises' and its restaurant charges 18% GST with ITC. Otherwise the in-hotel restaurant charges 5% without ITC.
Do hotels charge CGST and SGST or IGST?
Hotel accommodation is always billed with CGST + SGST of the state where the hotel is located (place of supply is the hotel), even if the guest or the company paying is registered in another state. This is why corporate guests often cannot claim ITC on hotel stays outside their home state.
Do small hotels and homestays below ₹20 lakh turnover need to charge GST?
If your aggregate annual turnover is below the ₹20 lakh registration threshold (₹10 lakh in special-category states) you are not required to register or charge GST. Once registered, however, you must charge the applicable slab on every taxable room night.