GST for hotels changed on 22 September 2025, and a lot of what’s written online still describes the old rates. This guide sets out the current rules for room tariffs, OTA commission and in-house restaurants, with the notification behind each one, so you can check them yourself or with your CA.
What is the GST rate on hotel rooms in India in 2026?
Hotel rooms pay either 5% or 18% GST, depending on the room’s value per unit per day. The dividing line is ₹7,500.
| Value of supply per unit per day | GST rate | Input tax credit | Since |
|---|---|---|---|
| Up to and including ₹7,500 | 5% (2.5% CGST + 2.5% SGST) | Not allowed | 22 September 2025 (was 12% with credit) |
| Above ₹7,500 | 18% (9% CGST + 9% SGST) | Allowed | Unchanged by the 2025 changes |
The GST Council recommended cutting the lower band from 12% to 5% without input tax credit at its 56th meeting, with service rate changes taking effect on 22 September 2025.[1] Notification No. 15/2025-Central Tax (Rate) put this into law by setting the central tax on that entry at 2.5%, with the condition that credit of input tax “has not been taken”.[3] The Ministry of Finance’s own FAQ confirms that rooms valued up to ₹7,500 attract 5% without input tax credit.[2]
Rooms above ₹7,500 fall under the general accommodation entry, taxed at 9% central tax (18% in total) with no input tax credit restriction.[4]
Note the boundary: a room at exactly ₹7,500 is in the 5% band, because the entry says “less than or equal to”.
How is the ₹7,500 “per unit per day” value worked out?
The test uses the value of supply of a unit of accommodation per day, which is generally what you actually charge for the room per night, not a published rack rate.[4] A room listed at ₹8,000 but sold at ₹7,200 is generally valued at ₹7,200.
A few situations need more care: extra beds, meal plans bundled into the room price, stays priced as packages, and properties where some room types fall on each side of ₹7,500. These depend on how you price and invoice, so agree the treatment with your CA before you rely on it.
Whatever you decide, your booking engine and billing software should apply the right band to each invoice automatically. Our booking engine checklist includes a simple test: make test bookings above and below ₹7,500 and check the GST on each invoice.
Can I claim input tax credit on rooms at ₹7,500 or less?
No. The 5% rate only applies on condition that you don’t take input tax credit on the goods and services used to supply those rooms.[3] That includes the GST on OTA commission, software, linen and most other costs of running the rooms.
Rooms above ₹7,500 work the normal way: you charge 18% and can usually claim credit for the GST you pay on inputs. If you sell rooms in both bands, the credit has to be split between them. Work this out with your CA.
Does GST apply on OTA commission?
Yes. OTAs charge 18% GST on their commission. Commission for booking accommodation is classified as a reservation service (SAC 998552) under the support services heading,[6] which is taxed at 9% central tax, 18% in total.[4]
Whether that 18% costs you anything depends on your room rate:
- Rooms above ₹7,500: the GST on commission can usually be claimed as input tax credit, so it isn’t a real cost.
- Rooms at ₹7,500 or less: it can’t be claimed, so it adds 18% to whatever commission you pay. A 20% commission effectively becomes 23.6%.
What GST applies to a restaurant inside a hotel?
A hotel restaurant pays 18% with input tax credit if it’s at a “specified premises”, and 5% without input tax credit otherwise.[4]
From 1 April 2025, a premises is a specified premises for a financial year if:[5]
- In the previous financial year, you supplied hotel accommodation there with a value above ₹7,500 per unit per day for any unit; or
- You filed a declaration opting in, between 1 January and 31 March of the previous financial year; or
- You’re applying for GST registration and filed an opt-in declaration within 15 days of the acknowledgement of your application.
So a hotel that sold even one room above ₹7,500 last financial year charges 18% on its restaurant this year. Notification 05/2025 also includes a form for declaring a premises as not specified; check with your CA whether and when it applies to you.[5]
Who pays GST when a guest books through an OTA?
It depends on whether your hotel is registered for GST.
- Registered hotels charge GST on the room and pay it themselves. The OTA charges you GST on its commission.
- Hotels not required to register don’t pay GST on rooms booked through an OTA. Under section 9(5) of the CGST Act, the OTA (as the e-commerce operator) pays the GST on those rooms instead.[7]
When an OTA collects the payment for a booking, it also collects tax at source (TCS) under section 52 of the CGST Act. Since 10 July 2024, the rate is 0.5% (0.25% CGST plus 0.25% SGST, or 0.5% IGST).[8] This isn’t an extra tax on top of your GST. It’s collected against your supplies and can be credited to you, so ask your CA to reconcile it with the OTA’s statements each month.
Worked examples
Two one-night bookings, each through an OTA at 20% commission. These are examples only, and they assume commission is charged on the room rate before tax.
| One night | ₹5,000 room | ₹9,000 room |
|---|---|---|
| GST on the room | 5% = ₹250 | 18% = ₹1,620 |
| Guest pays | ₹5,250 | ₹10,620 |
| OTA commission (20%) | ₹1,000 | ₹1,800 |
| 18% GST on commission | ₹180 | ₹324 |
| Can you claim that GST back? | No | Usually yes |
| Real cost of the OTA booking | ₹1,180 | ₹1,800 |
The ₹5,000 room pays less GST to the guest, but its OTA bookings cost 18% more than the headline commission.
How does GST change your direct-vs-OTA maths?
For hotels at ₹7,500 a night or less, GST makes every OTA booking more expensive than the commission rate suggests, and makes every direct booking worth more. A 20% commission is really 23.6%.
For hotels above ₹7,500, the GST on commission is usually recoverable, so the headline commission is closer to the real cost.
Our OTA commission calculator handles both cases: leave the GST setting on “Work it out” and it applies the ₹7,500 rule to your average room rate. For a plan to bring that cost down, see how to reduce OTA commission for your hotel.
GST filing stays with you and your CA. Ask them to check how your invoices apply the ₹7,500 rule.
Every booking that moves from an OTA to your own website removes the commission, and the GST on it. Our Direct Booking Optimization service helps hotels make that move.