Understanding GST on Hotel Room Rent: 1 Minute to Learn Everything About GST on Hotel Stays

Understanding the Goods and Services Tax (GST) applied to hotel room rent in India is crucial for both travelers and hospitality professionals. GST is a value-added tax levied on most goods and services sold for domestic consumption. When it comes to hotel accommodation, the GST rate varies according to the actual tariff per night charged from the guest, rather than the declared or published room rate.

As of June 2024, hotels in India follow a tiered structure for GST on room rent:

1. No GST: If the room rent is below ₹1,000 per night, no GST is applied.
2. 12% GST: If the rent is between ₹1,001 and ₹7,500 per night, a 12% GST is levied.
3. 18% GST: For room rents above ₹7,500 per night, the GST charged is 18%.

It’s important to note that these rates are subject to change based on government policies, so always confirm the rates at the time of booking.

With my background in room planner solutions, I believe transparency in cost helps guests better estimate their total stay expenses, which is essential for designing a satisfying hospitality experience. For hotel owners and operators, integrating GST compliance seamlessly into booking systems, billing, and communication can enhance the guest experience and streamline operations.

Tips 1:

Consider updating your hotel’s billing formats to reflect GST breakdowns clearly—show room tariff, GST rate, and the total payable amount. This not only ensures regulatory compliance but also establishes trust with your clients, creating a smoother, more professional check-in and check-out process.

FAQ

Q: What is the GST rate if I book a hotel room for ₹2,000 per night?

A: The GST rate for a ₹2,000/night room is 12% as per current regulations.

Q: Is GST calculated on the discounted rate or the published tariff?

A: GST is calculated on the actual amount charged to the guest after discounts, not the published tariff.

Q: Does GST apply to all types of hotel accommodations?

A: Yes, GST applies to hotels, inns, guest houses, clubs, campsites, and similar accommodations.

Q: Can I claim Input Tax Credit (ITC) on hotel room GST?

A: Businesses can claim ITC on GST paid for hotel rooms if the expense is for business purposes and meets eligibility criteria.

Q: Are food services included in the hotel GST rate?

A: No, food and beverages charged separately are billed under the GST applicable to restaurant services, not the room rent slab.