Hotel GST in India: Latest Tax Rules, CGST/SGST/IGST, B2B, B2C and OTA Bookings Explained

Hotel GST in India affects every room booking, every restaurant bill, and every OTA settlement that passes through a hotel's accounts. The rules changed twice in 2025: in April, the government replaced the old "declared tariff" basis with actual transaction value; then in September, the 12% bracket for mid-range rooms dropped to 5% and lost Input Tax Credit (ITC) along the way. If your hotel has not updated its billing configuration since September 2025, some invoices may be carrying the wrong rate.

This guide covers the current rules in plain terms: which GST rate applies to which room, when CGST and SGST apply versus IGST, how B2B and B2C invoices differ, how OTA settlements connect to your GST return, and what ITC you can legitimately claim or pass on to corporate customers.

What Are the Current GST Rates on Hotel Rooms in India?

Hotel accommodation in India is taxed at three rates, determined by the actual amount charged per room per night (not the rate printed on a tariff card). The structure below has been effective from 22 September 2025, following the 56th GST Council Meeting (3 September 2025) and CBIC Notification No. 15/2025-Central Tax (Rate) dated 17 September 2025.

GST on hotel accommodation always splits into CGST + SGST (or CGST + UTGST for union territories). For a room at 18%, this is 9% CGST + 9% SGST. For a room at 5%, it is 2.5% CGST + 2.5% SGST. IGST does not apply to hotel accommodation in almost all domestic bookings; the place-of-supply section below explains why.

How Did Hotel GST Rules Change in 2025?

Two amendments in 2025 reshaped hotel GST. The April change affected how rates are determined and how restaurant services inside hotels are taxed. The September change cut the rate on mid-range rooms but removed ITC at the same time.

Change 1: April 1, 2025 — "Declared Tariff" Replaced with Actual Transaction Value

Before April 2025, the applicable GST rate was calculated on the hotel's "declared tariff" (the price published on a rate card or board), not the actual selling price. A hotel with a declared tariff of ₹8,000 that discounted rooms to ₹5,000 still attracted 18% GST. Notification No. 05/2025-CTR (effective 1 April 2025) removed this concept entirely. GST is now applied to the actual transaction value charged to the guest for each night. Discounts offered by the hotel directly reduce the taxable value.

Change 2: September 22, 2025 — 12% Rate Cut to 5%, ITC Removed for Mid-Range Rooms

The most significant recent change: rooms charged at ₹1,001 to ₹7,500 per night previously attracted 12% GST with full ITC. From 22 September 2025 (CBIC Notification No. 15/2025-CTR), the rate on this bracket dropped to 5%, but ITC was removed entirely for rooms in this range. Hotels with rooms priced between ₹1,001 and ₹7,500 must reverse or stop availing ITC on inputs attributable to those rooms.

Practical impact: A hotel that was previously charging 12% and claiming ITC on housekeeping supplies, linen, and amenities for mid-range rooms must now reconfigure its PMS to charge 5% and stop taking that ITC. Hotels with a mix of room types above and below ₹7,500 must apportion ITC under Rule 42 of the CGST Rules, treating the 5% supply as an exempt supply for ITC reversal purposes.

Restaurant and Food Services in Hotels: What Is a "Specified Premises"?

Whether a hotel's restaurant charges 5% or 18% GST depends on whether the hotel qualifies as a "specified premises." The classification is based on the preceding financial year's room charges, not the current year's pricing.

A hotel that raises its room prices mid-year above ₹7,500 does not immediately become a specified premises. The classification takes effect from the start of the next financial year, based on what was actually charged in the preceding year. Hotels wishing to opt in voluntarily must file a declaration with the GST authorities between 1 January and 31 March of the year preceding the financial year for which the classification is sought.

Important for corporate customers: ITC on food and beverages is blocked under Section 17(5)(b) of the CGST Act regardless of whether the hotel is a specified premises. A company can claim ITC on the room accommodation bill; it cannot claim ITC on the restaurant bill. Hotels should issue separate invoices for accommodation and food rather than a single consolidated bill.

CGST, SGST and IGST: Which Tax Applies to a Hotel Bill?

Hotel accommodation in India is always subject to CGST + SGST, not IGST. Under Section 12(3) of the IGST Act, the place of supply for services relating to immovable property, including hotels, is the location of the property itself. A hotel in Goa is always making an intra-state supply in Goa, regardless of whether the guest is from Delhi, Mumbai, or another country.

This often surprises corporate finance teams who expect IGST when an employee from Maharashtra stays in a hotel in Karnataka. The law is clear: the guest's home state and the company's billing state do not shift the place of supply. CGST + SGST of the hotel's state always applies.

Numerical Examples

B2C Hotel Bookings: GST for Individual Guests

A booking is B2C when the guest does not provide a GSTIN or when the stay is for personal use even if a GSTIN is quoted. Most leisure bookings, tourist stays, and personal OTA bookings fall into this category.

B2C Invoice Requirements

• Hotel's legal name, address, and GSTIN
• Invoice number and date of issue
• Guest name and address
• Description of service: room type, dates, number of nights
• Taxable value, CGST rate and amount, SGST rate and amount
• Total invoice amount

For B2C supplies above ₹2.5 lakh per invoice, the hotel must capture additional details (such as the guest's state code) in GSTR-1 under the large B2C category. Below that threshold, a consolidated B2C summary is permitted for GSTR-1, though hotels typically issue individual checkout invoices.

A guest from Tamil Nadu staying in a hotel in Rajasthan receives a CGST (Rajasthan) + SGST (Rajasthan) invoice. IGST is not applicable. The guest has no ITC entitlement as an individual consumer.

B2B Hotel Bookings: GST for Corporate Customers

A booking is B2B when a GST-registered business provides its GSTIN and the accommodation is for a business purpose such as employee travel, client meetings, or project work. Corporate travel programs, company-negotiated rates, and conference bookings typically fall here.

B2B Invoice Requirements

• All fields required for a B2C invoice, plus:
• Customer's legal name as registered on GST portal
• Customer's 15-digit GSTIN
• Customer's billing address (state may differ from hotel's state)
• Place of supply: the hotel's state (not the company's state)
• Tax type: CGST + SGST (not IGST, even if company is from another state)

Hotels should validate the corporate GSTIN through the official GST portal before issuing the B2B invoice. An invalid or mistyped GSTIN prevents the company from claiming ITC and often results in the invoice being disputed at checkout or post-audit.

Can a Company Claim ITC on Hotel Accommodation?

Yes, provided the accommodation is for business purposes. Hotel accommodation is not listed in the blocked-credit categories under Section 17(5) of the CGST Act. An employee staying at a hotel to attend a client meeting, training, or project is a legitimate business expense and ITC is available on the GST paid.

Two important caveats. First, food and beverages at the hotel restaurant are blocked under Section 17(5)(b); the company cannot claim ITC on that portion. Second, if the accommodation is incidental to personal use or employee welfare without a clear business link, the department may disallow the ITC claim.

For rooms at 5% (non-specified premises): the hotel itself cannot claim ITC on its inputs for those rooms, but the corporate customer can still claim ITC on the GST paid to the hotel. The recipient's ITC eligibility is determined by the recipient's own use, not by whether the supplier had ITC available.

B2B Example: Delhi Company, Employee Stays in a Bengaluru Hotel

The Delhi company receives CGST (Karnataka) and SGST (Karnataka) credit. CGST credit can be set off against the company's CGST or IGST liability. SGST (Karnataka) credit can be set off against the company's SGST or IGST liability under Section 49(5) of the CGST Act. This requires the company's accountant to record the credit correctly in GSTR-3B.

Hotel Bookings Through Online OTAs: Who Pays GST?

When a registered hotel receives a booking through an OTA such as MakeMyTrip, Booking.com, Goibibo, or Agoda, the hotel remains the supplier of accommodation services and is responsible for paying GST on the full booking value. The OTA acts as an intermediary, not the supplier.

Section 9(5): When Does the OTA Become Liable?

Section 9(5) of the CGST Act shifts the GST liability for accommodation services from the hotel to the e-commerce operator (OTA) only when the hotel is not required to register under GST, that is, when the hotel's annual turnover is below the ₹20 lakh threshold (₹10 lakh in certain special category states). In that scenario, the OTA collects and pays GST on the accommodation service on behalf of the hotel.

For the vast majority of hotels that hold a GSTIN, Section 9(5) does not apply. The hotel pays its own output GST on accommodation, and the OTA's obligation is limited to collecting TCS under Section 52.

Section 52: TCS by OTAs on Registered Hotels

Under Section 52 of the CGST Act, every e-commerce operator (OTA) must collect Tax Collected at Source at 1% (0.5% CGST + 0.5% SGST) on the net taxable value of supplies made by registered sellers through the platform. The OTA files a monthly GSTR-8 reporting the TCS collected. The hotel then sees this amount credited in its electronic cash ledger and can apply it against its GST liability, reducing the cash outflow on tax payment dates.

GST on OTA Commission

The OTA charges the hotel a commission on each booking, typically 10% to 25% of the room rate. This commission is a service fee subject to 18% GST. The hotel pays this GST (usually as a deduction in the OTA settlement) and can claim ITC on it, since the commission is a legitimate business expense incurred in furtherance of the hotel's taxable supply.

OTA Settlement: A Practical Accounting Walkthrough

Here is how a typical OTA booking settles for a hotel charging above ₹7,500 (18% rate, specified premises). The room charge exclusive of GST is ₹10,000 and the OTA commission rate is 15%.

Hotel's net GST position for this booking:

• Output GST on accommodation: ₹1,800
• Less ITC on OTA commission GST: ₹270
• Less TCS credit (after OTA files GSTR-8): ₹100
• Net GST payable in cash: ₹1,430

A hotel that does not reconcile the OTA's GSTR-8 with its own GSTR-3B misses the TCS credit and effectively overpays GST month after month. GST-ready billing systems like JHATTSE Business PMS generate GSTR reports and flag TCS credits against each OTA channel, simplifying this reconciliation considerably.

Complete Scenario Reference Table

The table below covers the most common hotel GST situations. All examples assume the hotel is a registered taxpayer and the room charge figures are exclusive of GST.

*OTA commission GST may be IGST if the OTA is registered in a different state from the hotel. Confirm by checking the OTA's tax invoice header.

Cancellations, Refunds and OTA Discounts

When a booking is cancelled and a refund is issued, the hotel must issue a credit note under Section 34 of the CGST Act. The credit note reduces output GST liability in the period it is issued, not the period of the original booking. A revenue reversal made without a formal credit note creates a mismatch between GSTR-1 (where the original supply was reported) and GSTR-3B (where the net liability is paid).

OTA cancellation adjustments require particular care. If the OTA deducts a no-show fee from the settlement, the hotel needs to confirm whether this represents taxable income and issue the appropriate documents. If the OTA offers a platform-funded discount coupon directly to the guest (not from the hotel's pocket), the hotel's taxable value is unchanged; the hotel charges GST on the full amount it receives from the OTA, not the discounted price the guest paid.

Common GST Mistakes Hotels Make

• Still using declared tariff after April 2025. GST must be calculated on the actual amount charged per night. Hotels using billing templates or PMS configurations built before April 2025 may still be applying declared-tariff logic.
• Charging 12% instead of 5% on mid-range rooms. The rate on ₹1,001–₹7,500 rooms fell to 5% from 22 September 2025. Overcharging guests is a compliance issue and must be corrected by a credit note.
• Claiming ITC on inputs for 5% rooms. ITC is unavailable for hotel accommodation taxed at 5%. Hotels with mixed room types must reverse ITC attributable to those rooms under Rule 42.
• Issuing IGST invoices for hotel accommodation. The place of supply is the hotel's location, not the guest's home state or the company's registered state. IGST should not appear on accommodation invoices for domestic bookings.
• Not capturing corporate GSTIN at check-in. An incorrect or missing GSTIN on checkout invoices cannot easily be corrected once GSTR-1 is filed. Collect and validate GSTIN at reservation or check-in, not at checkout.
• Combining room and restaurant charges on one invoice. Corporate customers can claim ITC on accommodation but not on food and beverages. A combined invoice forces the company to either forgo ITC on the accommodation component or file an incorrect ITC claim.
• Ignoring OTA TCS credits. Missing the TCS credit filed in the OTA's GSTR-8 means the hotel pays more GST in cash than it legally owes. This compounds across dozens of bookings per month.
• Treating OTA platform coupons as hotel discounts. If an OTA funds a coupon from its own marketing budget, the hotel's taxable value and GST liability are unchanged. Applying the discount to the hotel's taxable value understates output GST.
• Not issuing credit notes on refunds. Revenue reversals without a formal credit note leave the original supply recorded in GSTR-1 without any corresponding reduction, creating a mismatch with GSTR-2B.
• Incorrect specified premises classification. A hotel whose rooms crossed ₹7,500 in the preceding financial year but whose restaurant is still charging 5% is applying the wrong rate. This is flagged in GST scrutiny and can result in a demand with interest.

Frequently Asked Questions

What is the GST rate on hotel rooms in India?

Nil for rooms charged below ₹1,000 per night, 5% (without ITC for the hotel) for rooms charged at ₹1,001 to ₹7,500 per night, and 18% (with full ITC for the hotel) for rooms charged above ₹7,500 per night. These rates are effective from 22 September 2025.

Is hotel GST based on the declared tariff or the actual selling price?

Since 1 April 2025, GST is calculated on the actual transaction value charged to the guest, not the declared tariff. Discounts offered by the hotel reduce the taxable value; discounts funded by an OTA from its own budget do not.

Does a hotel charge IGST to a customer from another state?

No. The place of supply for hotel accommodation is the location of the hotel under Section 12(3) of the IGST Act. CGST + SGST of the hotel's state always apply, regardless of where the guest or the booking company is from.

Can a company claim ITC on hotel accommodation?

Yes, if the accommodation is for a business purpose such as employee travel or client meetings. ITC on room accommodation is not blocked under Section 17(5) of the CGST Act. ITC on food and beverages is blocked under Section 17(5)(b) and cannot be claimed regardless of the hotel's GST rate.

What is the difference between a B2B and a B2C hotel invoice?

A B2B invoice includes the corporate customer's GSTIN, legal name, and billing address; it is reported in GSTR-1 under taxable B2B supplies. A B2C invoice is issued to a guest without a GSTIN (or for personal use) and is reported under B2C supplies. B2C invoices above ₹2.5 lakh require additional state-level details in GSTR-1.

How does GST work for hotel bookings through OTAs?

For registered hotels, the hotel pays output GST on the full accommodation value. The OTA deducts its commission (with 18% GST on that commission), collects TCS at 1% under Section 52, and files GSTR-8 monthly. The hotel claims the TCS as a credit against its GST liability.

Who pays GST on an OTA hotel booking?

The hotel pays output GST on accommodation (it is the supplier). The OTA pays 18% GST on its commission income. For unregistered hotels with turnover below ₹20 lakh, Section 9(5) shifts the accommodation GST liability to the OTA.

What is GST TCS for hotels?

Tax Collected at Source under Section 52 of the CGST Act. OTAs must collect 1% (0.5% CGST + 0.5% SGST) of the net taxable value of supplies made by registered hotels through the platform. The OTA files GSTR-8 monthly and the hotel applies the TCS credit against its output GST liability.

Is GST charged on OTA commission?

Yes. OTA commission is a service fee and attracts 18% GST. The hotel receives a tax invoice from the OTA for the commission amount plus GST and can claim ITC on that GST, since the commission is a business input.

How should hotel cancellations and refunds be treated for GST?

The hotel must issue a credit note under Section 34 of the CGST Act for any booking cancellation that results in a refund. The credit note reduces the hotel's output GST liability in the return period in which it is issued. Revenue reversals without a corresponding credit note create mismatches between GSTR-1 and GSTR-3B.

What is a "specified premises" under GST?

A hotel where any room was actually charged above ₹7,500 per night in the preceding financial year, or a hotel that filed a voluntary opt-in declaration. Specified premises charge 18% GST with ITC on restaurant services. Non-specified premises charge 5% without ITC on restaurant services.

What GST details should a corporate customer provide to claim ITC on a hotel stay?

The company's legal name as registered on the GST portal, its 15-digit GSTIN, and the state code. Provide these at the time of reservation or check-in. An invoice issued with a wrong GSTIN or under a personal name instead of the company's legal name will fail ITC reconciliation in GSTR-2B.

Managing Hotel GST Without the Errors

Two rate changes in a single year — one removing ITC for mid-range rooms, another shifting the basis from declared tariff to actual value — leave little margin for outdated billing configurations. A hotel management system needs to apply the correct rate automatically based on actual nightly charge, distinguish B2B and B2C invoices, capture GSTIN at check-in, generate GSTR-1 and GSTR-3B input data, and produce channel-wise OTA reconciliation statements that match TCS credits to individual bookings.

JHATTSE Business PMS covers GST-ready billing, e-invoicing, and GSTR report generation as part of a flat plan at ₹1,800 per month + 18% GST, with no per-room or per-module charges. The free proposal includes a walkthrough of the billing and GST workflow. The product demo playlist on YouTube shows the invoicing and OTA settlement screens in detail. More articles on running a hotel efficiently are on the JHATTSE Business blog.

Disclaimer: This article is for general informational purposes only and reflects publicly available information about GST rules applicable to hotel accommodation in India as of the dates cited. It does not constitute legal, tax, or accounting advice. GST rules are subject to change by the GST Council, Ministry of Finance, and CBIC. Hotel operators, finance teams, and accountants should consult a qualified GST professional or chartered accountant for advice specific to their circumstances and transactions.