Effective 22nd September 2025, GST rates for hotel accommodation in India are revised: rooms with tariffs up to ₹7,500 per night attract 5% GST (without Input Tax Credit - ITC), while rooms priced above ₹7,500 continue to attract 18% GST (with full ITC). Rooms priced at or below ₹1,000 per night remain exempt (0% GST).
GST on hotel rooms is reduced from 12% to 5% for tariffs up to ₹7,500 per day, effective 22nd September 2025. No ITC is allowed at 5%, so hotels with both budget and premium rooms must carefully manage their tax credits. Rooms priced above Rs.7,500 will continue to attract 18% GST, and ITC is fully available here.
Starting September 22, 2025, GST in India will be simplified to primarily two rates: 5% and 18%, with a special 40% rate on luxury and sin goods like tobacco and high-end vehicles. Many essentials, including certain medicines and foods, are now zero-rated, while several items see reduced rates.
September 2025 GST collection is Rs. 1,89,017 crores.
New GST Rate on Hotel Rooms (Effective September 22, 2025)
The GST applicable on hotel rooms depends upon the room tariff. For rooms costing up to ₹7,500 per night, the GST is 12%. And for rooms that are priced above ₹7,500 per night, it is 18%.
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.
To illustrate how the GST calculator works, let's consider a few examples: Example 1: Room tariff is INR 1,200 per night. Since the rate falls between INR 1,001 and INR 7,500, the applicable GST rate is 12%. For a stay of 5 nights, your total GST would be INR 720 (INR 1,200 x 12% x 5 nights).
For any standard-rated supplies of goods or services that you make on or after 1 Jan 2024, you must charge GST at 9%. For instance, if you issue an invoice and receive payments for your supply on or after 1 Jan 2024, you must account for GST at 9%.
You will get your annual GST/HST credit, which was calculated using information from your 2024 tax return, in four payments. The CRA will make these payments on the 5th day of July and October 2025, and of January and April 2026.
For the period April to December of the current financial year 2025–26, gross GST collections increased by 8.6 per cent to about Rs 16.5 lakh crore, compared to Rs 15.2 lakh crore during the corresponding period of the previous fiscal. All major components—CGST, SGST and IGST—recorded growth during this period.
2022, Works contract services provided to Central and State Government, or Local Authorities, which were earlier eligible for concessional rate of 12% GST,would attract GST at the rate of 18% in view of amendment carried out in notification No. 11/2017- Central Tax (Rate) vide notification No.
Tax changes for 2025, largely driven by the "One Big Beautiful Bill" (OBBBA) Act, introduce significant deductions for seniors, tips, overtime, and auto loan interest, expand the Child Tax Credit, and raise the SALT deduction cap to $40,000, while making several 2017 Tax Cuts and Jobs Act provisions permanent, including the seven tax brackets. Key changes include a $2,200 Child Tax Credit, a $6,000 senior deduction, deductions for qualified tips and overtime, and a permanent standard deduction increase.
Taxes on aerated drinks, tobacco and luxury goods will now come under the 28 percent tax bracket under GST, so it will get costlier.
India's GST regime is undergoing a landmark transformation with the 56th GST Council meeting unveiling GST 2.0 - next-generation reforms simplifying tax slabs to 5%, 18%, and 40%. Effective from September 22, 2025, these reforms aim to ease compliance, boost consumption, and fuel economic growth.
In order to qualify for this, you have to have worked in 2023 and had an income below $150,000. You also qualify if you received Employment Insurance, paid EI premiums or made CPP contributions. You should receive this via cheque or direct deposit by April 2025.
You can claim a GST refund in the following situations, when additional tax is paid or deposited due to errors or omissions. When dealers and deemed export goods or services are subject to refund or refund. Refunds can also be made for purchases made by UN agencies or embassies.
Here's what you need to know about the relevant threshold and how it affects your business or enterprise. The GST threshold for 2025 is $75,000 in annual GST turnover for most businesses. If your GST turnover exceeds this amount in any rolling 12-month period, you must register for GST within 21 days.
How to Avoid GST on Overseas Purchases Legally
GST Rate and Slab Changes in September 2025
GST rate cuts on 200 items happened from 22nd September 2025. 90% of items in the current 28% slab are moved to the 18% slab. Almost 99% of the items in the 12% slab are moved to the 5% slab.
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.
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.
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 latest reforms mark a major simplification of the GST structure. The shift to a two-slab system of 5% and 18%, removing the earlier 12% and 28% rates, will make taxation more transparent and easier to follow.