Understanding the New GST Rate on Hotel Room Rent: 1 Minute to Decode the Latest Changes in GST for Hotel Stays

The Goods and Services Tax (GST) rate applicable to hotel room rent has undergone notable changes in recent years, affecting both guests and hotel businesses across India. As of July 2022, the GST Council revised the tax slabs, impacting the affordability and compliance requirements for travelers and hoteliers alike. Understanding these updates is crucial for making informed decisions, whether you're planning a short staycation or managing a hospitality business.

Previously, hotel rooms priced below ₹1,000 per day were exempt from GST. However, under the revised regime, all room tariffs—even those below ₹1,000—are now taxable. The current GST rates on hotel accommodation are:

1. 12% GST: Applicable for rooms with a tariff between ₹1,000 and ₹7,500 per night.
2. 18% GST: Levied on rooms with a tariff above ₹7,500 per night.

It’s important to note that the GST is charged on the declared or published tariff, not the actual price paid after discounts, if any. Hoteliers are also required to issue proper tax invoices, and guests should always review these invoices to confirm the correct GST rate has been applied.

From a design perspective, these changes can influence how hoteliers approach space optimization, amenities, and pricing strategies to remain competitive while staying compliant. For those in the hospitality industry—or anyone planning renovations or new hospitality ventures—utilizing advanced room layout solutions can help maximize both functionality and guest satisfaction while navigating new regulatory requirements.

Tips 1:

Always check the hotel's published tariff before booking so you understand the GST rate being levied. If you’re renovating hotel spaces or even transforming a home into a guesthouse, consider user-centric designs that can appeal to a broad audience and potentially justify higher tariff brackets, enhancing your property's value proposition.

FAQ

Q: What is the current GST rate applicable to hotel room rent?

A: As of July 2022, hotels charge 12% GST on room tariffs between ₹1,000 and ₹7,500 per night, and 18% GST on rooms above ₹7,500 per night.

Q: Are all hotel rooms taxable under GST regardless of room rent?

A: Yes, after the 47th GST Council meeting in July 2022, even rooms with tariffs below ₹1,000 are subject to GST.

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

A: GST is levied on the declared/published tariff, not on the discounted price paid by the guest.

Q: Can I claim input tax credit on hotel GST if I'm a business traveler?

A: Yes, input tax credit (ITC) is available for registered businesses using hotel accommodation services, subject to certain conditions as per the GST Act.

Q: How do GST rate changes affect hotel design and maintenance decisions?

A: Higher tax brackets may encourage hoteliers to enhance room features or reimagine layouts using tools like advanced room planners, to provide added value and justify pricing, all while meeting compliance requirements.