The slabs from 22 September 2025
| Room value per night | GST | Input tax credit | Before 22 Sept 2025 |
|---|---|---|---|
| Up to ₹1,000 | Nil (exempt) | Not applicable | Nil |
| ₹1,001 to ₹7,500 | 5% (2.5% CGST + 2.5% SGST) | Not allowed: credit on inputs must not have been taken | 12% |
| Above ₹7,500 | 18% (9% CGST + 9% SGST) | Allowed | 18% |
The 5% rate is the amended entry at serial number 7, item (i), of Notification No. 11/2017–Central Tax (Rate), with the condition that credit of input tax charged on goods and services used in supplying the service has not been taken. Read the entry on the CBIC GST site.
The ₹7,500 cliff: a worked example
Compare two rooms priced just either side of the threshold. These figures illustrate the slab arithmetic.
| Room at ₹7,400 | Room at ₹7,600 | |
|---|---|---|
| Room rate | ₹7,400 | ₹7,600 |
| GST rate | 5% | 18% |
| GST | ₹370 | ₹1,368 |
| Guest pays | ₹7,770 | ₹8,968 |
A ₹200 higher rate makes the guest pay ₹1,198 more, and the hotel keeps only ₹200 of it. This is why many hotels price a category at or below ₹7,500 and sell the next one up as a clearly better product, instead of nudging a rate across the line. It also matters for seasonal and weekend pricing: a peak-season increase that crosses ₹7,500 is a very different price to the guest.
What decides the slab
The entry is based on the value of supply of a unit of accommodation for a day, which is the amount charged for the room-night before taxes. Your PMS should work the slab out from the rate charged, and apply it the same way on every invoice, so that the same rate is never taxed at 5% on one bill and 18% on another.
What the 5% rate means for input tax credit
Because the 5% entry carries the no-credit condition, the GST you pay on housekeeping supplies, repairs and services becomes a cost for rooms in that band, and your costing for budget rooms should include it. If you have credit in your electronic credit ledger from before 22 September 2025, or rooms in both bands, the reversal and the apportionment have to be worked out under section 17 of the CGST Act and rules 42 and 43 of the CGST Rules.
What your PMS and invoice must get right
- Room rate ex-tax per night shown on the invoice, with the slab-wise GST on its own line.
- Extra bed, meals and room service on separate lines. Food and beverage are taxed under their own entries, not the room slab.
- Guest GSTIN captured for corporate bookings, so the invoice is a proper B2B invoice.
- The accommodation SAC (9963) on the invoice.
- The tax posted at night audit, before the day closes, so revenue lands in the right account.
- An e-invoice for B2B invoices once aggregate turnover crosses ₹5 crore. See e-invoicing basics.
- Credit notes for adjustments, never edits to a finished invoice.
A month-end check
- Room revenue by tariff band, so you can see how much of the month fell in each slab.
- GST collected per slab against the GST posted in the books.
- B2B invoices reconciled against the GST returns.
- Any rate plan that crossed ₹7,500 during the month, and whether it was intended.
Putting it into practice
In Hotel ERP, room revenue, the guest folio, GST invoicing and the night audit run on one system, so tax is posted from the folio instead of being retyped at checkout. Work out how rate changes move your revenue with the RevPAR calculator, and read why direct bookings change the maths.
Check before you rely on this
This guide is general information. Read the amended entry in Notification No. 15/2025–Central Tax (Rate) on the CBIC GST site, and have your CA confirm how it applies to your property, especially if you have rooms in both bands.
Frequently asked questions
What is the GST rate on hotel rooms below ₹1,000?
Nil. Accommodation with a value of supply up to ₹1,000 per unit per day is exempt from GST.
Is GST charged on the published rate or the discounted rate?
The slab follows the value of supply, which is the amount actually charged for the room-night before taxes. A discounted rate at or below ₹7,500 is taxed at 5%.
Can a hotel claim input tax credit at 5%?
No. The 5% entry applies only where credit of input tax on goods and services used in supplying the accommodation has not been taken. Rooms above ₹7,500 at 18% can claim credit.
Do hotels have to issue e-invoices?
B2B invoices must be e-invoiced once aggregate turnover crosses ₹5 crore. Invoices to individual guests (B2C) are generally outside e-invoicing.
Practical, India-specific guides from the team behind WebSoftOS cloud ERP, by Ridhi Technologies, Zirakpur, Punjab.