GST on Hotels & Restaurants – Applying Correct GST Rate?
Table of Contents
GST on Hotels & Restaurants – Are You Applying the Correct GST Rate?
(Based on Notification No. 11/2017-Central Tax (Rate) as amended, effective from 22 September 2025)
GST Rate Chart for Hotels, Restaurants & Catering Services
| Sr. No. | Particulars of Service | SAC Code | GST Rate | ITC Eligibility | Key Condition |
| A1 | Hotel accommodation where room/unit value is up to INR 7,500 per day | 996311 | 5% | No ITC | Mandatory rate; hotel cannot opt for 18% with ITC |
| A2 | Hotel accommodation where room/unit value exceeds INR 7,500 per day | 996311 | 18% | ITC Available | Full ITC available subject to GST provisions |
| B1 | Restaurant services other than at specified premises | 996331 | 5% | No ITC | Includes dine-in, takeaway, delivery and room service |
| B2 | Restaurant services at specified premises | 996331 | 18% | ITC Available | Applicable to restaurants operating from specified premises |
| C1 | Outdoor catering outside specified premises | 996335 | 5% | No ITC | No ITC on inputs, input services or capital goods |
| C2 | Outdoor catering at specified premises | 996335 | 18% | ITC Available | Catering supplied through specified premises arrangement |
| C3 | Banquet / Event Package with Catering | 996314 / 996335 | 18% (Generally) | ITC Available | Includes weddings, conferences, banquets and event packages |
Hotel Accommodation GST Rates
| Room Tariff Per Day | GST Rate | ITC to Hotel | Example |
| Up to INR 7,500 | 5% | No | Room rent INR 5,000 → GST INR 250 |
| Above INR 7,500 | 18% | Yes | Room rent INR 10,000 → GST INR 1,800 |
Example 1: Budget Hotel
| Particulars | Amount |
| Room Tariff | INR 5,000 |
| GST @ 5% | INR 250 |
| Total Bill | INR 5,250 |
Result: Hotel cannot claim ITC on furniture, maintenance, housekeeping, security, etc.
Example 2: Luxury Hotel
| Particulars | Amount |
| Room Tariff | INR 10,000 |
| GST @ 18% | INR 1,800 |
| Total Bill | INR 11,800 |
Result: Hotel can claim ITC on eligible business expenses.
Restaurant GST Rates
| Type of Restaurant | GST Rate | ITC |
| Standalone Restaurant | 5% | No ITC |
| Food Court / Café | 5% | No ITC |
| Restaurant at Specified Premises | 18% | ITC Available |
| Hotel Restaurant at Luxury Property | 18% | ITC Available |
Example
| Particulars | Standalone Restaurant | Restaurant at Specified Premises |
| Food Bill | INR 2,000 | INR 2,000 |
| GST Rate | 5% | 18% |
| GST Amount | INR 100 | INR 360 |
| Total Bill | INR 2,100 | INR 2,360 |
| ITC to Restaurant | No | Yes |
Outdoor Catering GST Rates
| Type of Catering | GST Rate | ITC |
| Catering outside specified premises | 5% | No ITC |
| Catering at specified premises | 18% | ITC Available |
Example
| Particulars | Amount |
| Catering Contract Value | INR 1,00,000 |
| GST @ 5% | INR 5,000 |
| Total Invoice | INR 1,05,000 |
Result: No ITC available to caterer.
Banquet Hall & Wedding Package GST
| Service | GST Rate | ITC |
| Wedding Package | 18% | Yes |
| Banquet Hall Rental with Catering | 18% | Yes |
| Conference Package | 18% | Yes |
| Event Package | 18% | Yes |
Example
| Particulars | Amount |
| Hall Rental | INR 8,00,000 |
| Catering Charges | INR 12,00,000 |
| Decoration | INR 3,00,000 |
| Total Package | INR 23,00,000 |
| GST @18% | INR 4,14,000 |
What is a “specified premise”?
A premise is treated as a specified premise if:
| Condition | Status |
| Hotel room value exceeded INR 7,500 per day in previous FY | Specified Premises |
| Hotel voluntarily opts for specified premises status | Specified Premises |
| Hotel room value below threshold and no option exercised | Not a Specified Premises |
Why It Matters?
| Restaurant Category | GST Rate |
| Non-Specified Premises | 5% (No ITC) |
| Specified Premises | 18% (With ITC) |
Quick Compliance Checklist – GST on Hotels & Restaurants
| Check Point | Action Required |
| Room value up to INR 7,500 | Charge 5% GST |
| Room value above INR 7,500 | Charge 18% GST |
| Standalone restaurant | Charge 5% GST |
| Restaurant at specified premises | Charge 18% GST |
| Outdoor catering outside specified premises | Charge 5% GST |
| Catering at specified premises | Charge 18% GST |
| Banquet package with hall & catering | Generally 18% GST |
| Mixed supplies | Review contract and invoice structure carefully |
| ITC reversal | Apply Rules 42/43 where required |
One-Line Summary
| Service Type | GST Rate | ITC |
| Budget Hotel (≤ INR 7,500) | 5% | No |
| Luxury Hotel (> INR 7,500) | 18% | Yes |
| Standalone Restaurant | 5% | No |
| Restaurant at Specified Premises | 18% | Yes |
| Outdoor Catering (Normal) | 5% | No |
| Catering at Specified Premises | 18% | Yes |
| Banquet / Event Package | 18% | Yes |
Practical Advice for Businesses Safe & Compliant in 2026):
- Do NOT claim ITC on hotel accommodation invoices unless you’re a tour operator/travel agent making onward taxable supply of hotel stays. Wrong claims can lead to notices, interest & penalties!
- Treat GST paid on hotel stays as a business expense (no credit).
- Business travelers can claim ITC only when GST is charged at 18% and subject to fulfillment of conditions under Section 16 of the CGST Act. ” is not expressly stated in Section 16 of the CGST Act also Blocked Credit Rule—Section 17(5)(b)(i) of CGST Act, 2017. ITC is only allowed if the inward hotel supply is used to make an outward taxable supply of the same category (i.e., you are resupplying hotel accommodation as a taxable service). but is derived from a combined reading of the GST rate notification for hotel accommodation and the ITC provisions.
- Hotels: Carefully reverse proportionate ITC for 5% supplies (under Rules 42/43 if mixed with 18% rooms).
- Always keep invoices, booking proofs, and purpose docs—helpful for audits. Practical Documentation Requirements: For Businesses Claiming ITC: Invoice requirements Company name, Company GSTIN, Hotel GST invoice, GST separately charged along with supporting documents like travel approval, employee travel itinerary, Business purpose documentation, and expense reimbursement records.
Practical Rule:
- If the supply is taxed at 5%, ITC is generally not available.
- If taxed at 18%, ITC is generally available, subject to normal GST conditions and specific ITC restrictions under the CGST Act.
- For luxury stays (>INR 7,500), the hotel enjoys ITC, but you (as guest) usually don’t. unless if the inward hotel supply is used to make an outward taxable supply of the same category (i.e., you are resupplying hotel accommodation as a taxable service).
- This is one of the most misunderstood areas in GST – many companies still wrongly claim ITC on business travel hotels and face demands later. Stay cautious!
**********************************************************
If this article has helped you in any way, i would appreciate if you could share/like it or leave a comment. Thank you for visiting my blog.
Legal Disclaimer:
The information / articles & any relies to the comments on this blog are provided purely for informational and educational purposes only & are purely based on my understanding / knowledge. They do noy constitute legal advice or legal opinions. The information / articles and any replies to the comments are intended but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as a legal advice or an indication of future results. Therefore, i can not take any responsibility for the results or consequences of any attempt to use or adopt any of the information presented on this blog. You are advised not to act or rely on any information / articles contained without first seeking the advice of a practicing professional.