Is GST registration mandatory for hotels?

GST registration is mandatory if your aggregate turnover exceeds ₹20 Lakh or if you list on OTAs or make inter-state supplies.

Can I claim ITC on hotel construction?

ITC on hotel construction is generally blocked under Section 17(5). However, a hotel with 18% GST may claim ITC on the portion of the building used for taxable supplies, subject to proper apportionment.

GST for Hotels & Hospitality 2026 – Complete Guide to Rates, Registration, ITC & OTA Compliance

Everything you need to know about GST for hotels, resorts, guest houses, and restaurants — updated rates (5% vs 18%), mandatory registration thresholds, Input Tax Credit rules (including blocked credits), OTA/TCS compliance, and invoicing formats for the hospitality sector.

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Quick Summary – GST for Hotels & Hospitality

Standard Hotel Room Rate (≤ ₹7,500/day): 5% GST (without Input Tax Credit).
Premium Hotel Room Rate (> ₹7,500/day): 18% GST (with full Input Tax Credit).
Restaurant within Hotel (Room ≤ ₹7,500): 5% GST (without ITC).
Restaurant within Hotel (Room > ₹7,500): 18% GST (with ITC).
Standalone Restaurants / Cloud Kitchens: 5% GST (without ITC).
GST Registration Threshold: ₹20 Lakh (Normal States) / ₹10 Lakh (Special Category States).
Mandatory for E-Commerce: Any hotel listing on MakeMyTrip, Booking.com, Agoda, etc., must register for GST regardless of turnover.
ITC on Construction: Blocked — no ITC on building construction or renovation (unless it's a plant/machinery).
OTA/TCS Compliance: E-commerce operators deduct 1% TCS (0.5% CGST + 0.5% SGST) on net bookings.
Place of Supply: For hotel stays, it is the location of the hotel property, not the guest's home address.

Takeaway: GST for hotels hinges on one number — your room tariff. The ₹7,500 per day threshold determines your GST rate, your ITC eligibility, and your invoicing structure. Getting this right is the foundation of hospitality tax compliance.

1. Introduction – Why GST is Complex for Hotels

The hospitality sector is one of the most dynamic industries under GST. Unlike a manufacturer or a trader who deals with a single product category, a hotel serves multiple revenue streams under one roof — room bookings, restaurant dining, banquet events, spa services, and sometimes retail sales. Each of these streams has its own GST rate, ITC treatment, and invoicing requirement.

To add to this, the GST Council introduced significant changes in 2025 that altered the tax landscape for hotels. The definition of "specified premises" was clarified, and the rate slabs were rationalized. Today, a hotel charging ≤₹7,500 per day operates under a completely different GST framework compared to a hotel charging >₹7,500 per day.

Then there's the OTA (Online Travel Agency) layer. If you list on MakeMyTrip, Booking.com, Agoda, or Goibibo, you're dealing with e-commerce compliance, TCS deductions, and specific invoicing rules. A single compliance slip here can result in blocked refunds, penal interest, and GST notices.

This guide covers every aspect of GST for hotels and hospitality — from rates and registration to ITC rules, OTA compliance, and invoicing.

Takeaway: GST for hotels is not just about charging the right rate. It's about structuring your entire revenue mix, ITC strategy, and OTA integration correctly from day one.

2. GST Rates for Hotels – Tariff-Based Breakdown

The GST rate for hotel accommodation is entirely dependent on the value of supply per unit of accommodation per day (i.e., the room tariff). This is the single most important determinant of your GST compliance.

The ₹7,500 Threshold Explained

Room Tariff (Per Unit / Per Day)	GST Rate	Input Tax Credit (ITC)	Reporting in GSTR-1
Up to ₹7,500	5%	Not Available	Taxable supplies at 5%
Above ₹7,500	18%	Available	Taxable supplies at 18%

What is "Value of Supply"?

For GST purposes, the value of supply includes:

📌 Room rent for the duration of stay.
📌 Mandatory charges bundled with the room (e.g., compulsory breakfast, airport transfer).
📌 Services that are naturally bundled with the accommodation and provided as part of the same package.
📌 It does not include separately charged optional services (e.g., spa, laundry, banquet) — these are taxed separately.

What are "Specified Premises"?

Under the updated GST rules, a "specified premises" is a hotel where the value of supply for any unit of accommodation is above ₹7,500 per day. The hotel must declare itself as a specified premises to the jurisdictional GST officer.

Crucial Clarification: A standalone restaurant cannot declare itself as a "specified premises" simply to pay 18% GST and claim ITC. The 18% option is available only to hotels that meet the ₹7,500 per day threshold for accommodation.

Example – Rate Calculation: A hotel in Goa charges ₹6,000 per night for a room. GST applicable is 5% (₹300). The total invoice value is ₹6,300. No ITC can be claimed on expenses related to this room. If the same room is upgraded to ₹8,000 per night during peak season, the GST becomes 18% (₹1,440), and the hotel becomes eligible to claim ITC on related expenses.

Takeaway: Your room tariff determines your entire GST structure. Review your tariffs carefully — a ₹100 increase above ₹7,500 can change your GST rate, ITC eligibility, and invoicing requirements completely.

3. GST on Hotel Restaurants – The In-House Dining Rules

Restaurant service inside a hotel is taxed separately from room accommodation. The rate depends on two factors: whether the restaurant is inside a hotel that qualifies as "specified premises," and whether the guest is a hotel resident (in-house guest) or an outside walk-in.

Restaurant GST Rates

Restaurant Type	GST Rate	ITC
Standalone Restaurant / Cloud Kitchen / Food Truck	5%	No ITC (except for specified exceptions)
Restaurant in Hotel with Tariff ≤ ₹7,500/day	5%	No ITC
Restaurant in Hotel with Tariff > ₹7,500/day	18%	ITC Available

In-House Guest vs. Walk-In Guest

When a guest stays in the hotel and dines at the hotel's restaurant, the total bill (room + food) can be a composite supply if it is bundled as a package. In such cases:

📌 If the room tariff is ≤ ₹7,500, the entire package (including food) is taxed at 5% (without ITC).
📌 If the room tariff is > ₹7,500, the entire package (including food) is taxed at 18% (with ITC).
📌 If food is billed separately from the room (not part of a package), it is taxed as a standalone restaurant service at 5% (if the hotel is not a specified premises) or 18% (if it is).

Important: The 5% rate for standalone restaurants is without ITC. You cannot claim ITC on inputs used for these services. However, ITC is available on the purchase of capital goods (like kitchen equipment) used for restaurant operations, but the same must be attributed to taxable supplies.

Example – Composite vs. Separate Billing: A hotel charges ₹6,000 per night for a room. A guest stays for 2 nights and dines at the in-house restaurant for ₹2,000. If the hotel bills ₹14,000 as a single package (₹12,000 room + ₹2,000 food), the entire ₹14,000 is taxed at 5%. If the hotel bills the room separately (₹12,000 at 5%) and the food separately (₹2,000 at 5%), the total tax is the same but the billing treatment is different. However, if the hotel has a tariff of ₹9,000 per night, the entire package is taxed at 18%.

Takeaway: Always determine whether the restaurant bill is part of a composite package or a standalone service. The GST rate for the entire bill can change based on this distinction.

4. Input Tax Credit (ITC) for Hotels – What You Can and Cannot Claim

ITC is one of the biggest sources of confusion for hotel businesses. The rules are nuanced and depend on your GST rate slab.

ITC Eligibility by Rate Slab

Rate Slab	ITC on Goods (Inputs)	ITC on Services (Input Services)	ITC on Capital Goods
5% (Tariff ≤ ₹7,500)	Not Available	Not Available	Not Available
18% (Tariff > ₹7,500)	Available	Available	Available

ITC on Construction and Renovation

This is one of the most frequent traps for hotel developers.

Blocked Credit: ITC is not available on the construction of a building or civil structure, or on renovation/repair of a building (Section 17(5) of the CGST Act).
Exception: ITC is available on construction of a building that is intended to be used as a hotel (a commercial property), provided the hotel charges GST at 18% (tariff >₹7,500). However, ITC is blocked for the portion of the building used for non-business purposes or for the 5% slab rooms.
Practical Guidance: Most hotels segregate their premises — rooms above ₹7,500 (18%) and rooms below ₹7,500 (5%). The ITC on construction is apportioned based on the floor area or value of supplies. This requires careful documentation and a robust accounting system.

ITC on Other Expenses

Available (for 18% slab)

ITC on room amenities, food and beverages, linen, housekeeping supplies, electricity (if billed with GST), professional fees, advertising, and OTA commissions.

Not Available (for 5% slab)

No ITC on any expenses — inputs, services, or capital goods. All expenses become part of the cost, directly impacting profitability.

Example – ITC Impact: A hotel with ₹8,000 per night tariff pays GST of 18% on the room bill. It can claim ITC on:
• Linen and toiletries (₹1,00,000 GST)
• F&B raw materials (₹50,000 GST)
• Hotel renovation (if it's a new hotel) (₹5,00,000 GST)
• OTA commissions (₹10,000 GST)
Total ITC available: ₹6,60,000. This significantly improves the hotel's profitability.

Takeaway: ITC is the single biggest reason why a hotel might choose a higher tariff (18% slab) over a lower tariff (5% slab). The ability to offset input costs can more than compensate for the higher tax rate.

5. GST Registration Threshold for Hotels

Understanding the threshold limits helps you determine whether your hotel, resort, or guest house needs to register for GST.

General Threshold Limits

Category	Threshold Limit (Aggregate Turnover)
Normal Category States	₹20 Lakh per year
Special Category States	₹10 Lakh per year

Mandatory Registration (Regardless of Turnover)

You must register for GST even if your turnover is below the threshold if:

E-Commerce Listings: You list your hotel on MakeMyTrip, Booking.com, Agoda, Goibibo, Yatra, or any other online aggregator.
Interstate Supply: You provide accommodation to guests from other states (which is common for most hotels).
Reverse Charge: You are liable to pay tax under reverse charge on certain services (e.g., legal fees, goods transport agency).
Voluntary Registration: You want to claim ITC on your expenses, which requires GST registration.

How "Aggregate Turnover" is Calculated for Hotels

📌 Total of all taxable supplies (rooms, restaurant, banquet, spa) in a financial year.
📌 Excludes GST collected from guests.
📌 Includes exempt supplies and exports.
📌 Inter-state supplies are added to the aggregate turnover for determining the threshold.

Example – Threshold Calculation: A boutique hotel in a normal state has annual room revenue of ₹12 Lakh, restaurant revenue of ₹6 Lakh, and banquet revenue of ₹4 Lakh. Total aggregate turnover is ₹22 Lakh — above the ₹20 Lakh threshold. The hotel must register for GST.

Takeaway: Even if your turnover is low, listing on OTAs triggers mandatory registration. Most hotels operating in the digital ecosystem must register regardless of size.

6. OTA & E-Commerce Compliance for Hotels

Online Travel Agencies (OTAs) like MakeMyTrip, Booking.com, Agoda, and Goibibo have become the primary booking channel for hotels. Under GST, these platforms are classified as E-Commerce Operators (ECOs) and are subject to specific compliance provisions.

How GST Works on OTA Bookings

1 Booking is Made: A guest books a room through an OTA. The OTA collects the payment from the guest.

2 OTA Deducts TCS: The OTA deducts 1% TCS (0.5% CGST + 0.5% SGST) on the net taxable value of the supply.

3 OTA Deposits TCS: The OTA deposits the TCS with the government and files GSTR-8 reporting the deduction.

4 Hotel Receives Payout: The hotel receives the net payout after TCS deduction and OTA commission.

5 Hotel Claims TCS Credit: The hotel can claim the TCS credit in GSTR-3B against its GST liability.

Invoicing Rules for OTA Bookings

Who Issues the Invoice? The hotel issues the GST invoice to the guest, not the OTA.
Invoice to Guest: The hotel must issue a tax invoice to the guest in the name of the guest, showing the room charges and GST.
Invoice to OTA: The OTA issues a commission invoice to the hotel for its services, which the hotel can claim as ITC (if applicable).
TCS Credit: The hotel claims TCS credit in its GSTR-3B based on the TCS report in GSTR-2A.

TCS Reconciliation for Hotels

✅ Download the TCS report from the OTA portal every month.
✅ Match the TCS amount with the GSTR-2A TCS credit.
✅ Verify the GSTIN used by the OTA matches your registered GSTIN.
✅ Report any discrepancy to the OTA for correction.
✅ Claim the TCS credit in GSTR-3B.

Example – OTA Booking Flow: A guest books a room for ₹10,000 through MakeMyTrip. The hotel's room tariff is ₹8,000 per night (18% GST). MakeMyTrip collects ₹10,000, deducts 1% TCS (₹100), and remits ₹9,900 to the hotel. The hotel issues an invoice for ₹10,000 to the guest, showing ₹1,800 GST. The hotel claims TCS credit of ₹100 in GSTR-3B against its GST liability.

Takeaway: OTA compliance is not optional. If you list on any platform, you must account for TCS, issue invoices correctly, and reconcile the TCS credit every month.

7. GST Invoicing Requirements for Hotels

A GST-compliant invoice is the backbone of your compliance and your guest's ITC claim. Every hotel invoice must contain specific fields.

Mandatory Fields on a Hotel GST Invoice

Hotel's legal name, address, and GSTIN
Guest's name and address (if available)
Unique invoice number (consecutive serial)
Date of invoice
Description of service (room type, number of nights, restaurant items)
HSN/SAC code — SAC 9963 for accommodation services
Taxable value
GST rate (5% or 18%) and amount (CGST + SGST / IGST)
Place of supply (location of hotel)
Whether GST is payable under reverse charge
Signature of authorised signatory

Invoice Types for Hotels

Invoice Type	When Used
Tax Invoice	Standard invoice for taxable supplies of hotel services
Bill of Supply	For supplies under composition scheme or exempt services
Credit Note	For refunds, cancellations, or post-sale discounts
Debit Note	For upward revisions in value or tax

Example – Invoice for a Hotel Stay: A guest stays for 2 nights at ₹6,000/night. Total room charges: ₹12,000. GST at 5%: ₹600. Total invoice value: ₹12,600. The invoice shows SAC 9963, GST at 5%, place of supply as the hotel's city, and a declaration that GST is not payable under reverse charge.

Takeaway: An incomplete invoice is as good as no invoice. It can block your guest's ITC claim, invite a GST notice, and delay payments.

8. Common GST Mistakes by Hotels & Solutions

These are the most frequent GST errors made by hotels, resorts, and restaurants — and how to fix them.

Error 1: Applying the Wrong Rate Based on Total Bill Using the total bill amount (including food) to determine if the hotel crosses the ₹7,500 threshold. The ₹7,500 threshold applies to the room tariff only. Food and other services are billed separately unless part of a composite package.

Error 2: Claiming ITC on the 5% Slab Claiming ITC on inputs while charging 5% GST. No ITC is available on the 5% slab. All input costs become part of your cost base.

Error 3: Claiming ITC on Hotel Construction Claiming ITC on the construction of a new hotel building. ITC on construction is blocked under Section 17(5). Only the portion used for taxable supplies (18% slab) may be claimable with careful apportionment.

Error 4: Not Charging GST on OTA Bookings Assuming the OTA will collect and remit GST on the hotel's behalf. The hotel is responsible for charging GST. The OTA only collects TCS. The hotel must issue a GST invoice to the guest.

Error 5: Treating Restaurant and Room as One Service Bundling food and accommodation without checking the composite supply rules. A composite supply may be taxed at the rate of the principal service. But if billed separately, the tax rates apply individually.

Error 6: Not Registering Under E-Commerce Listing on OTAs without obtaining GST registration because turnover is below ₹20 Lakh. E-commerce listings trigger mandatory registration regardless of turnover. Register before listing.

Error 7: Ignoring TCS Reconciliation Not matching OTA TCS reports with GSTR-2A and GSTR-3B. Reconcile TCS every month. Missing TCS credit is lost revenue; over-claiming is a notice risk.

Error 8: Incorrect Place of Supply Using the guest's home address as the place of supply. For hotel accommodation, the place of supply is the location of the hotel property. Always use the hotel's state for CGST/SGST vs IGST determination.

Error 9: Charging GST on Cancellation Fees Treating cancellation charges as exempt or non-taxable. Cancellation charges are considered a supply of service and are taxable at the same rate as the accommodation service.

Error 10: Missing SAC Code on Invoices Using the wrong or missing SAC code for accommodation services. Use SAC 9963 for hotel and accommodation services. For restaurant services, use SAC 9963 (same group). Verify the correct 6-digit SAC for your specific service.

Takeaway: Most GST errors by hotels stem from a misunderstanding of the ₹7,500 threshold and ITC rules. Get these two right, and the rest becomes manageable.

9. Frequently Asked Questions – GST for Hotels

The GST rate for hotels is 5% for rooms with tariff up to ₹7,500 per day, and 18% for rooms with tariff above ₹7,500 per day. The 18% slab allows Input Tax Credit.

GST registration is mandatory if your aggregate turnover exceeds ₹20 Lakh (₹10 Lakh for special category states) or if you list on OTAs or make inter-state supplies.

ITC on hotel construction is generally blocked under Section 17(5). However, a hotel with 18% GST (tariff > ₹7,500) may claim ITC on the portion of the building used for taxable supplies, subject to proper apportionment.

Restaurant services in a hotel with room tariff up to ₹7,500 are taxed at 5% without ITC. If the hotel's tariff is above ₹7,500, the restaurant service is taxed at 18% with ITC.

The hotel issues a GST invoice to the guest for the full value of the stay, including GST. The OTA collects 1% TCS on the net booking value, which the hotel can claim as credit.

The place of supply for hotel accommodation is the location of the hotel property, not the guest's home address.

Yes — cancellation charges are treated as a supply of service and are taxable at the same rate as the accommodation service.

A "specified premises" is a hotel where the value of supply for any unit of accommodation exceeds ₹7,500 per day. The hotel must declare itself as a specified premises to the GST officer to charge 18% GST and claim ITC.

No — standalone restaurants charging 5% GST cannot claim ITC on inputs or input services. The 5% rate is a concessional rate that comes with the condition of no ITC.

The SAC code for hotel and accommodation services is 9963. This includes services provided by hotels, motels, inns, guest houses, and similar establishments.

If a hotel package includes room, food, and other services as a composite supply, the GST rate is determined by the principal supply (accommodation). The entire package is taxed at the rate applicable to the room tariff.

Operating without GST registration when required invites penalties, interest on tax due, and potential legal action. It also blocks your ability to claim ITC or issue valid GST invoices.

Yes — hotels with 18% GST (tariff > ₹7,500) can claim ITC on food and beverages used for business purposes. Hotels with 5% GST cannot claim ITC on any inputs.

Banquet services are generally taxed at 18% with ITC, regardless of the hotel's room tariff. This is because banquet services are a separate service from accommodation.

For GST compliance issues, contact the GST helpdesk at 1800-103-4786. For assistance with your hotel's GST compliance, contact DisyTax at 7065281345 or email admin@disytax.com.

10. Related GST Resources for Hospitality & Other Businesses

GST for Restaurants GST for Hotel Restaurant GST for Cloud Kitchen GST for Cafe Business GST for Catering Business GST for Food Truck GST for Bakery GST Registration Guide Online GST Registration GST Return Filing Services GST Rates India List Input Tax Credit Guide Blocked Credit in GST Place of Supply of Services

Disclaimer: This guide is for general information only and does not constitute legal or professional advice. GST rates, rules, and hospitality-specific provisions change from time to time. Please verify all details with the official GST portal or consult a qualified professional before acting on this information.