New GST for Hotel Industry: Room Tariff Slabs and Food Services Tax
Quick Summary
- Hotel room tariffs are taxed at 0% for rooms under ₹1,000, 5% for ₹1,001 to ₹7,499, and 18% for ₹7,500 and above, with ITC available only for the highest bracket.
- Restaurant dining and room service in hotels are taxed at a uniform 5% without ITC, while alcoholic beverages are outside GST and subject to state excise.
- Other hotel services like spas, gyms, laundry, and event spaces are taxed at 18%, with ITC eligibility following standard rules.
- The revised GST structure removes the 12% slab, reducing it to 5% and changing many 28% items to 18%, with a special 40% slab for luxury and sin items.
- The new GST rates make budget hotels more affordable, improve mid-range hotel competitiveness, and potentially increase costs for luxury hotels and large events.
The hotel industry plays a big role in India’s tourism and business ecosystem. But with different GST rates for room tariffs, food, and event services, understanding taxation is key for both hotel owners and customers. In this guide, we break down hotel gst rate, including room booking, dining, and service charges.
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New GST on Hotel Rooms and Services
The Government of India revised GST applicability on hotel accommodation and related services effective 22 September 2025. The updated structure simplifies taxation by removing the earlier 12% GST slab for hotel rooms and introducing clearer rate brackets based on the room tariff.
GST on hotel services applies to several offerings such as room accommodation, restaurant dining, room service, banquet halls, and other hotel amenities. No compensation cess applies to hotel services.
GST on Hotel Room Tariffs in India
Hotel room GST is calculated based on the declared room tariff before discounts, not on the hotel’s star rating.
| Room Tariff per Night | GST Rate (After 22 Sept 2025) |
GST Rate (Before 22 Sept 2025) |
ITC Availability |
|---|---|---|---|
| Less than ₹1,000 | 0% (Exempt) | Exempt | Not applicable |
| ₹1,001 – ₹7,499 | 5% | 12% | No |
| ₹7,500 and above | 18% | 18% | Yes |
Key change: Mid-range hotels that were earlier taxed at 12% GST now fall under the 5% slab, though Input Tax Credit is not available.
(After 22 Sept 2025) 0% (Exempt)
(Before 22 Sept 2025) Exempt
(After 22 Sept 2025) 5%
(Before 22 Sept 2025) 12%
(After 22 Sept 2025) 18%
(Before 22 Sept 2025) 18%
GST on Hotel Food, Restaurant Dining, and Room Service
Food services in hotels follow the same GST rules as standalone restaurants.
| Food/Service | GST Rate | ITC Availability |
|---|---|---|
| Restaurant dining (AC or Non-AC) | 5% | No |
| Room service from hotel restaurant | 5% | No |
| Alcoholic beverages | Outside GST | State excise duty applies |
This uniform 5% GST on restaurant food simplifies billing for both standalone restaurants and hotel dining services.
GST on Other Hotel Services (Spa, Gym, Laundry, Events)
Additional services offered by hotels generally fall under the 18% GST slab.
| Service Type | GST Rate |
|---|---|
| Spa & wellness center | 18% |
| Gym and fitness center | 18% |
| Laundry and ironing | 18% |
| Event space / banquet hall / conference hall | 18% |
These services may allow Input Tax Credit under standard GST rules.
Composite vs Itemized Hotel Billing
Hotel invoices may either be itemized or bundled, which affects how GST is calculated.
Itemized Billing
Each service is taxed separately:
Room tariff → taxed as per room GST slab
Food → taxed at 5% GST
Spa, gym, laundry → taxed at 18% GST
Package Billing
If services are bundled together (for example, stay + meals + spa), GST is usually calculated based on the primary service, which is typically the room tariff category.
How to Calculate GST on Room Tariff and Food Services
Assume stay is within the same state (so CGST + SGST).
Room charges
Room tariff: ₹3,500 per night
Nights: 2
Room value: ₹3,500 × 2 = ₹7,000
GST @ 5%: ₹350
CGST @ 2.5%: ₹175
SGST @ 2.5%: ₹175
Room total: ₹7,350
Food bill
Food value: ₹1,200
GST @ 5%: ₹60
CGST @ 2.5%: ₹30
SGST @ 2.5%: ₹30
Food total: ₹1,260
Grand total payable = ₹7,350 + ₹1,260 = ₹8,610
Conclusion
Understanding gst for hotel industry helps hoteliers optimise pricing, billing, and compliance—while also giving guests clarity on what they’re paying for. Whether you’re running a boutique hotel or a 5-star chain, being GST-savvy keeps your business guest-ready and tax-ready.
