Understanding GST Rates on Hotel Rooms: Fast-Track Guide to Hotel GST Rates You Need to Know

Goods and Services Tax (GST) has significantly impacted the hospitality industry in India, particularly regarding the taxation of hotel room tariffs. If you’re planning a hotel stay or managing hospitality operations, understanding GST rates on hotel rooms is crucial for budgeting and compliance.

As of the latest guidelines, GST rates on hotel room tariffs are segmented based on the declared room rate per night:

1. No GST if the room tariff is less than ₹1,000 per night.
2. 12% GST for room tariffs between ₹1,001 and ₹7,500 per night.
3. 18% GST for room tariffs above ₹7,500 per night.

It’s important to note that GST is applicable on the ‘declared tariff’—the published room rate prior to any discount. For example, if a hotel publishes a room at ₹8,000 but offers a discount, GST is still levied based on ₹8,000, not the discounted price.

In my experience as an interior designer, the layout and amenities offered in a room significantly influence pricing. Luxury interiors, bespoke furnishings, and amenities can push a room’s value—and its GST rate—into a higher bracket. Transparency about GST charges also affects guest experience. To streamline how you present this information or design your booking flows, you might consider using advanced technology such as a room planner to visualize room categories and tariff-based taxation for both management and customers. This ensures the booking experience aligns with both hospitality and tax compliance standards.

Tips 1:

Always check the latest GST notifications, as rates and slab thresholds may change periodically. Incorporate tax-inclusive pricing in all room displays to ensure clarity for guests and to avoid last-minute surprises at checkout.

FAQ

Q: What is GST in the context of hotel room tariffs?

A: GST, or Goods and Services Tax, is a unified tax levied on hotel room tariffs according to the declared nightly rate.

Q: Does GST apply to the discounted price or the declared tariff of the hotel room?

A: GST is applied on the declared (published) tariff, not the discounted price.

Q: Are there any exemptions from GST for hotel rooms?

A: Yes, rooms with tariffs less than ₹1,000 per night are exempt from GST.

Q: How can hotels better manage GST compliance in room design and category?

A: By categorizing rooms according to their tariff bands and employing digital tools to streamline room listing, pricing, and tax breakdowns.

Q: Do amenities and interior design affect the GST rate for hotel rooms?

A: Yes, luxury interiors or additional amenities can increase the room tariff, which may place the room into a higher GST slab.