New GST for Hotel Industry: Room Tariff Slabs and Food Services Tax
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 how GST applies to the hotel industry in India, including room booking, dining, and service charges.
New GST Rate on Hotel Services in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for hotel rooms, food/service, and allied offerings (no compensation cess).
New GST Rate on Hotel Room Tariff
| Room Tariff per Night | New GST Rate | With ITC (Input Tax Credit) |
|---|---|---|
| Less than ₹1,000 | 0% (Exempt) | Not applicable |
| ₹1,001 to ₹7,499 | 5% | No |
| ₹7,500 and above | 18% | Yes |
Tariff refers to the declared room price before discounts.
New GST on Food and Room Service
| Food/Service | New GST Rate | Type of Service |
|---|---|---|
| Restaurant dining (AC/non-AC) | 5% | Without ITC |
| Room service (from in-house restaurant) | 5% | Without ITC |
| Alcoholic beverages | Outside GST | State excise duty applies |
Standalone restaurants remain at 5% without ITC; hotel restaurants follow the same for food supply.
New GST on Other Hotel Services
| Service Type | New GST Rate |
|---|---|
| Spa & wellness center | 18% |
| Gym and fitness center | 18% |
| Laundry and ironing | 18% |
| Event space / conference hall | 18% |
Ancillary services typically remain in the 18% slab with ITC eligibility subject to normal rules.
Impact of New GST on Hotel Industry in India
| Aspect | Effect |
|---|---|
| Budget hotels (₹<1,000 tariff) | More affordable (GST-exempt) |
| Mid-range hotels | 5% GST (no ITC) improves competitiveness |
| Luxury hotels (₹7,500+) | 18% GST with ITC; cost impact depends on input credits |
| Food services in hotels | Uniform 5% without ITC simplifies billing |
| Banquet / events | Taxed at 18%, adds cost for large events |
Under the revised structure, the 12% slab is discontinued; items/services that were 12% generally move to 5% and many 28% items move to 18%. A narrow sin/luxury list uses a special 40% slab.
Is GST Applicable to Hotels?
Yes. GST is applicable on:
- Room tariffs
- Restaurant services (dine-in or room service)
- Banquet and conference halls
- Spa, gym, and laundry services offered by the hotel
The GST rate depends on the room price, not the hotel’s star category.
Old GST Rate on Hotel Room Tariff
(Old GST Rates – Applicable Until 21st September)
| Room Tariff per Night | GST Rate | With ITC (Input Tax Credit) |
|---|---|---|
| Less than ₹1,000 | Exempt | Not applicable |
| ₹1,001 to ₹7,499 | 12% | Yes |
| ₹7,500 and above | 18% | Yes |
Old GST on Food and Room Service
| Food/Service | GST Rate | Type of Service |
|---|---|---|
| Restaurant dining (AC/non-AC) | 5% | Without ITC |
| Room service (from in-house restaurant) | 5% | Without ITC |
| Alcoholic beverages | Outside GST | State excise duty applies |
Old GST on Other Hotel Services
| Service Type | GST Rate |
|---|---|
| Spa & wellness center | 18% |
| Gym and fitness center | 18% |
| Laundry and ironing | 18% |
| Event space/conference hall | 18% |
Composite vs Individual Billing – Why It Matters
If your hotel bill is itemized:
- Room = taxed at room slab (12% or 18%)
- Food = taxed at 5%
- Spa/laundry = taxed at 18%
However, if everything is bundled under one rate (like a package), Goods and Services Tax (GST) is calculated based on the primary service category, usually the room tariff.
Impact of Old GST on Hotel Industry in India
| Aspect | Effect |
|---|---|
| Budget hotels (₹<1,000 tariff) | More affordable (GST-exempt) |
| Mid-range hotels | 12% GST boosts competitive pricing |
| Luxury hotels (₹7,500+) | 18% GST may increase room cost |
| Food services in hotels | Uniform 5% GST simplifies billing |
| Banquet/events | Taxed at 18%, adds cost for big events |
Overall, GST brings transparency and standardization, but the absence of ITC on food services increases operational costs.
Conclusion
Understanding gst for hotel industry helps hoteliers optimize 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.
I am a Chartered Accountant with 5 years of experience specializing in GST, income tax, and HSN code classification. I help businesses with GST compliance, tax planning, and financial advisory, ensuring they meet regulatory requirements while optimizing their tax strategies. I aim to simplify GST filings, income tax laws, and HSN code classifications, helping professionals and business owners stay informed and compliant.
Frequently Asked Questions
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What is the GST rate on hotel room in India?
- 0% for rooms under ₹1,000
- 12% for ₹1,001-₹7,499
- 18% for ₹7,500 and above
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Is GST applicable on food in hotels?Yes, food ordered from hotel restaurants or through room service attracts 5% GST, without input tax credit.
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Can hotels claim ITC on purchases?Only on services taxed at 12% and 18%, not on restaurant services (5%).
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What is the GST on laundry or spa service at hotels?Charged separately at 18% GST as they are not part of core accommodation.
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What's the GST impact on hotel industry in India?It brought clarity but increased tax burden on luxury services and removed ITC on food, which affects hotel profit margins.