As of September 22, 2025, luxury hotels in India with a declared room tariff of above ₹7,500 per night attract a GST rate of 18%. This rate includes Input Tax Credit (ITC) for the hotel. In contrast, rooms priced at ₹7,500 or less have reduced GST rates, making 18% specific to premium/luxury accommodation.
For rooms priced up to ₹7,500 per night, the GST rate is 12%. For those priced above ₹7,501, the rate is 18%.
The GST rate structure has been simplified into three core slabs: 0%, 5%, and 18%, with a higher 40% rate specifically applied to luxury and sin goods. This GST reform aims to reduce taxes on essential and commonly used items, making them more affordable for the public, while also easing tax compliance for businesses.
Is GST charged on hotel rooms? Yes. GST is levied at 5% for rooms up to Rs.7,500 and 18% for rooms above Rs.7,500.
What is the main GST change affecting hotels as of 22nd September 2025? 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.
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.
Goods and Services Tax (GST) 2.0 reform, which came into effect from September 22nd, 2025, brought relief for the common people and boosts for businesses. One of the key GST updates under 2.0 reform is that it simplified the GST tax structure from a 4-slab (5%, 12%, 18% and 28%) to a 3-slab (5%, 18% and 40%).
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.
Calculation: Base Price: ₹50,000. GST Amount: ₹50,000 × 18% = ₹9,000. Total Amount: ₹50,000 + ₹9,000 = ₹59,000.
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%.
The key categories of goods and services included under the special 40% GST slab are, Tobacco and related intoxicants as sin goods (e.g., cigarettes, bidis, pan masala, caffeinated drinks) Drinks with high sugar content and caffeinated. Super-luxury and luxury 4-wheelers, 2-wheelers and personal use yacht, aircraft, ...
For adding GST, the following formula is used.
Example
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%.
Barring of GST Return on expiry of three years
The GST network issued another advisory on 7th June 2025, implementing the rule of time-barring of GST return filing beyond three years from the due date. By this update, taxpayers will not be able to file GST returns after three years from the due date of such return.
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.
The GST on hotel rooms has been reformed effective Sept 22, 2025.
What Are Luxury Tax Examples? Items subject to luxury taxes vary by jurisdiction but generally include high-value goods and services. Commonly taxed luxury items include expensive cars, yachts, private jets, high-end electronics, designer clothing, jewelry, and luxury real estate.
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)
The government now imposes 40% GST on luxury cars, luxury cars, handbags, yachts and more to discourage extravagant spending. These new rates make taxes easier and bring together old slabs that had both GST and compensation cess.