GST 2.0 for hotels in India, effective September 22, 2025, is a major tax reform that reduces the Goods and Services Tax on rooms priced up to ₹7,500 per night to 5% (without Input Tax Credit), down from 12%. This shift aims to boost affordable, mid-range, and boutique hotel bookings by lowering taxes, though it removes the ability for these hotels to claim credits on business expenses.
A: Hotel room tariffs up to ₹7,500 per day or equivalent will now attract 5% GST without input tax credit (ITC), down from 12% with ITC. Tariffs above ₹7,500 stay at 18% with ITC.
Simply put, GST on hotel stays depends on the declared room tariff per night. If your room costs Rs.7,500 or less, you pay 5% GST. No ITC. If it's more than Rs.7,500, the GST rate jumps to 18%, and ITC can be claimed.
GST 2.0 is a restructured tax framework introduced by the GST Council, featuring a simplified two-rate system of 5% and 18%, with exemptions for essentials.
GST is applied to most goods and services, including hotel accommodations, dining, and additional services. GST Rate: As of 2024, the GST rate is 9%. This tax applies to the following: Room Rates: GST is added to the rate charged for hotel rooms, making it essential for hotels to include this in their pricing model.
New GST Rate on Hotel Rooms
The GST rate on hotel rooms is 12% for room tariffs up to ₹7,500 per night and 18% for room tariffs above ₹7,500 per night.
GST, or Goods and Services Tax, is an indirect tax imposed on the supply of goods and services. It is a multi-stage, destination-oriented tax imposed on every value addition, replacing multiple indirect taxes, including VAT, excise duty, service taxes, etc.
At its core, GST 2.0 introduces a simplified two-slab structure (5% and 18%), replacing the earlier four-tier system of 5%, 12%, 18%, and 28%. Essentials like food, medicines, and education items move to the Nil or 5% category, while household goods and consumer durables see major rate cuts.
The timeline for when will new GST rates be implemented follows a defined schedule. New rates take effect September 22, 2025, for majority of goods and services. Tobacco products - cigarettes, chewing tobacco, zarda, and unmanufactured tobacco - maintain current rates temporarily.
Hotels, Motels, and Serviced Apartments
These are subject to 10% GST. Operators must issue tax invoices and include GST in the advertised prices. Even if you provide package deals (e.g., room plus breakfast), the entire amount is typically subject to GST unless individual components are GST-free.
Yes, businesses can claim Input Tax Credit (ITC) on hotel stays—but only for rooms taxed at 18%, i.e., rooms with an invoiced amount above Rs. 7,500 per night. Rooms taxed at the reduced 5% GST rate (invoiced at Rs. 7,500 or less) are not eligible for ITC, as this concessional rate is provided without ITC benefit.
The new rate eliminates the cess but increases the GST percentage so that tax collection stays balanced. Hotels costing more than ₹7,500 per night qualify as luxury hotels. GST on luxury hotels, service apartments, five-star resorts, and villas still stands at 18% GST.
Yes and no. Hotel VAT is levied by the government and charged to the guest. The hotel forms the middleman, transferring VAT from guests to the government. VAT, GST and sale taxes therefore don't really represent a hotel cost or a hotel fee in the traditional sense.
Types of GST in India
CGST (Central Goods and Services Tax) SGST (State Goods and Services. IGST (Integrated Goods and Services Tax) UTGST (Union Territory Goods and Services Tax)
It is expected to lower the cost of goods and services, boost the economy and make our products and services globally competitive. GST will make India a common national market with uniform tax rates and procedures and removes the economic barriers, thereby paving the way for an integrated economy at the national level.
GST 2.0 transforms compliance from monthly filings to continuous, automated monitoring — enabling instant refunds, AI-driven audits, and seamless invoice reconciliation.
How does GST work? The GST is an extra 10% charge you need to calculate when you invoice your customers. GST is a consumer- based tax which you'll need to collect on behalf of the government. Your customers will be required to pay the GST, not your business.
Who is liable to pay GST under the proposed GST regime? Under the GST regime, tax is payable by the taxable person on the supply of goods and/or services. Liability to pay tax arises when the taxable person crosses the turnover threshold of Rs. 20 lakhs (Rs.
GST 2.0 introduced a simplified two-slab system for hotel rooms: For Rooms less than or equal INR 7,500 per night: GST Rate: 5% (down from 12%) ITC Availability: Not allowed.
Office supplies, equipment, rental costs, and professional services are examples of expenses on which input tax can be claimed. Further, input tax cannot be claimed on the following expenses: private use, non-business entertainment, and motor vehicle expenses.