GST on hotel rooms in 2026: the rate for each room price, in plain words

Short answer: GST on a hotel room depends on the price you charge for that room per day. Up to ₹1,000 a day there is no GST. From ₹1,001 to ₹7,500 the rate is 5%, without input tax credit. Above ₹7,500 the rate is 18%, with input tax credit. These bands apply from 22 September 2025.

This guide explains the rules in plain words, with links to the official sources. It is general information, not tax advice. Confirm how the rules apply to your hotel with your chartered accountant (CA), because rates and conditions change, and your own case may have details this guide cannot cover.

The three bands

The price that counts is the value of the room for the day, which is what you actually charge, not a rack rate printed on a card. If you sell a room for ₹6,800 one night and ₹8,200 the next, the first night is taxed at 5% and the second at 18%.

What changed on 22 September 2025

Before 22 September 2025, rooms from ₹1,001 to ₹7,500 were taxed at 12% with input tax credit. The GST Council cut this to 5%, and the government's own questions and answers made one point very clear: the 5% rate is mandatory. A hotel cannot choose to charge 18% on a ₹6,000 room in order to claim input tax credit.

The same answers say what happens to credit:

1. Credit on goods and services used only for rooms up to ₹7,500 cannot be taken.
2. Credit on goods and services used partly for those rooms and partly for other supplies, such as rooms above ₹7,500, must be reversed in proportion, as if those rooms were exempt.

For most budget and mid price hotels, this means a lower bill for the guest but higher costs for the hotel, because the tax paid on purchases can no longer be set off. Hotel associations have asked the government to restore credit, so watch for changes.

What changed on 1 November 2026

A notification dated 27 October 2026 rewrote the credit conditions for the 5% entries from 1 November 2026. A hotel in the 5% band may now take credit on rooms it buys from another hotel, for example when it books guests into a partner hotel because it is full, but that credit is capped at the 5% level even if the other hotel charged 18%. Credit on everything else, such as housekeeping supplies or a new air conditioner, is still not allowed for 5% rooms.

For most owners of a single hotel this change is small. It matters more for those who resell rooms from other hotels.

Hotel me GST kitna lagta hai? A quick way to think about it

When an owner asks "hotel room me GST kitna lagta hai", the answer is always a question back: what do you charge for the room per day? Then:

• ₹1,000 or less: no GST.
• ₹1,001 to ₹7,500: 5%.
• More than ₹7,500: 18%.

Food, the restaurant and other services have their own rates. In particular, the restaurant rate inside a hotel can depend on whether the hotel counts as "specified premises", which turns on its room prices. This is a common source of mistakes, so ask your CA to check it for your hotel.

Common mistakes to avoid

• Charging 18% on a room under ₹7,500 to claim credit. The official answers say this is not allowed.
• Using one rate for a whole stay when the price changes from night to night across ₹7,500.
• Claiming credit on purchases for 5% rooms, or not reversing shared credit in proportion.
• Forgetting e invoicing for business guests. Above the turnover limit set by the rules, a bill to a business with a GSTIN needs an e invoice number. Ask your CA whether it applies to you.

How Keyvasa handles it

Keyvasa works out the GST on each night from the price of the room that night and shows the tax on every line of the bill. Bills to a business with a GSTIN can be sent for an e invoice number, and your purchases can be matched against GSTR 2B, so your CA sees the gaps before filing. You can read more on our billing and GST page. Keyvasa does not file your returns; your CA does.

Sources

• Press Information Bureau, Frequently Asked Questions 2 on the decisions of the 56th GST Council, 16 September 2025, questions 6, 7 and 9, as reproduced by taxguru.in
• Press Information Bureau, GST Council recommendations on rates for services, with effect from 22 September 2025: pib.gov.in
• Business Standard, "No ITC for hotel rooms up to Rs 7,500 under 5% GST, says FinMin": Business Standard
• CNBC TV18, "From Sept 22, 5% GST to apply on budget hotel stays, ITC option removed": cnbctv18.com
• A2Z Taxcorp, on Notification No. 06/2026 Central Tax (Rate), same line of business credit from 1 November 2026: a2ztaxcorp.net
• CalcGuru, "GST from 1 Nov: credit cap for hotels and caterers": calcguru.in
• CBIC, GST rates for goods and services: CBIC GST portal