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.
"Wasn't there a ₹1,000 exemption?"
There was, and it is gone. This is still the single most common misunderstanding at Indian front desks, so it is worth stating plainly: until 18 July 2022, a room priced at ₹1,000 per night or below was exempt from GST entirely. That exemption was withdrawn. Since then every room night is taxable, whatever the price.
So a ₹900 room today is not exempt. It sits in the lower slab and carries 5% GST. If your invoice template still zero-rates budget rooms, it has been wrong since 2022 and every one of those nights was short-taxed.
What Changed, and When
If you are comparing against an older article or a rate chart your CA sent you a few years ago, this is why the numbers do not match:
| Period | ₹1,000 and below | Up to ₹7,500 | Above ₹7,500 |
|---|---|---|---|
| Before 18 Jul 2022 | Exempt | 12% | 18% |
| 18 Jul 2022 onwards | 12% | 12% | 18% |
| Today (2026) | 5%, no ITC | 5%, no ITC | 18%, with ITC |
Two structural changes are worth noting. The old declared tariff test was replaced by the actual value of supply, which is why a discount can now move a night into the lower slab. And the lower slab lost input tax credit when it moved to 5%, so a property billing mostly ₹7,500-and-under rooms can no longer offset GST paid on its own purchases.
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 and the F&B line at its own slab: one invoice, two tax treatments, correctly split into CGST and SGST. The specified-premises test and the room-service edge cases are worked through in GST on restaurant food in hotels.
Can Your Corporate Guest Claim This Back?
Your front desk will be asked this at checkout, usually by someone travelling on company expenses, so it helps to know the answer. Short version: often they cannot, and it is not your fault.
Accommodation is billed with CGST and SGST of the state your hotel sits in, because the place of supply is the hotel itself. A company registered in Delhi that puts a guest up in your Jaipur property receives Rajasthan CGST and SGST, and it has no Rajasthan registration to set those credits against. The credit is simply stranded. A company registered in your own state can use it, provided the night was billed in the 18% slab, since the 5% slab carries no input tax credit at all.
What you can do is make the invoice usable. Capture the company name and GSTIN at check-in rather than at 11 PM on departure, put them on the tax invoice, and keep the room and food lines separately taxed. An invoice missing the guest's GSTIN is worthless to their finance team even when the credit would otherwise have been claimable.
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%.
- An invoice that is not a valid tax invoice: slab and split can both be right while the document still fails on missing GSTIN, HSN/SAC or invoice-series fields. The required layout is set out in the hotel GST invoice format.
- Taxing a retained cancellation fee at the room slab: a forfeited advance is not accommodation, and it does not follow the room rate. See GST on hotel cancellation charges.
- 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
Sukoon 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.
Is GST still exempt on hotel rooms below ₹1,000 per night?
No. Rooms priced at ₹1,000 per night or below were exempt until 18 July 2022, when that exemption was withdrawn. Every room night is taxable now regardless of price. A ₹900 room today sits in the lower slab and carries 5% GST without input tax credit. Invoice templates that still zero-rate budget rooms have been short-taxing those nights since 2022.
What was the GST rate on hotel rooms in 2022, and what changed since?
Before 18 July 2022: rooms at ₹1,000 or below were exempt, up to ₹7,500 was 12%, and above ₹7,500 was 18%. From 18 July 2022 the exemption went and everything up to ₹7,500 became 12%. Today the lower band is 5% without input tax credit and above ₹7,500 is 18% with credit. The old 'declared tariff' test was also replaced by the actual value of supply, which is why a discount can now move a night into the lower slab.
Can a company claim input tax credit on a hotel bill?
Often not. Accommodation is billed with CGST and SGST of the state the hotel is in, because the place of supply is the hotel. A company registered in a different state has no registration there to set those credits against, so the credit is stranded. A company registered in the same state can claim it, but only if the night fell in the 18% slab, as the 5% slab carries no input tax credit at all. Either way, capture the guest's company name and GSTIN at check-in so the invoice is usable.