Big GST Change for Hotel Accommodation Services in 2026

 Big GST Change for Hotel Accommodation Services in 2026

The Goods and Services Tax (GST) system in India underwent one of its most significant reforms in 2025, and its effects for the hotel and hospitality industry continue into 2026. Often referred to as GST 2.0, this overhaul simplified the GST rate structure and brought major changes to how hotel accommodation, food and beverage services, and related hospitality services are taxed.

These reforms were introduced by the 56th GST Council meeting, and became effective from 22nd September 2025. They aim to make travel more affordable, reduce compliance burden, and streamline tax administration

What Are the New Changes in GST for the Hotel Industry?

Here’s a breakdown of the major changes affecting hotel businesses from late 2025 into 2026:

✔ 1. Simplified GST Rate Structure

Under GST 2.0, India shifted to a simpler rate regime where the main consumption slabs are 5% and 18% (plus a special 40% sin/luxury rate for select goods). This replaced older multi-tier slabs like 12% and 28%.

✔ 2. Hotel Room Tariff Taxation

The most visible change for the hotel industry is the GST on hotel room tariffs:

• 🟢 Rooms priced up to ₹7,500 per night
  → 5% GST
  → No Input Tax Credit (ITC)
  This is mandatory — hotels cannot choose 18% with ITC on these rooms. 

• 🔵 Rooms priced above ₹7,500 per night
  → 18% GST
  → Input Tax Credit (ITC) available
  This applies to luxury and premium hotel accommodations.

This makes accommodation more affordable in the budget and mid-market segment, while premium hotels continue under the standard rate with credit benefits.

✔ 3. Food and Beverage GST Linked to Hotel Category

Another important change is how restaurant and food services in a hotel are taxed:

• If the hotel has no room above ₹7,500 per night
  → Restaurants and F&B in-house are taxed at 5% (no ITC).

• If the hotel has at least one room above ₹7,500 per night
  → All restaurant/F&B services inside that hotel are taxed at 18% with ITC (called “specified premises”).

✔ 4. Spa, Wellness and Other Services

Certain ancillary hotel services such as spa, salon, wellness or beauty services saw their GST rate reduced:

• 5% GST without ITC
  This replaces the earlier 12% with ITC option for these services.

✔ 5. Banquet, Transportation & Miscellaneous

Services such as banquets, transportation, parking, photography, laundry, and telephone services in hotels continue to attract 18% GST with special conditions unchanged.

What Is the GST Rate for Hotel Accommodation Services?

Here’s how GST is charged on hotel accommodation services as of 2026:

Room Tariff per Night	GST Rate (2026)	Input Tax Credit (ITC)
Up to ₹7,500	5% GST	❌ No ITC
Above ₹7,500	18% GST	✅ ITC Allowed

This means every hotel — whether budget, mid-range or luxury — must categorize its rooms and tax accordingly.

Is GST Charged on Hotel Accommodation?

Yes — GST is always charged on hotel accommodation services in India. Whether it’s a one-night stay in a small hotel or a week’s stay in a five-star resort, the chargeable GST depends on the room tariff value.

There is no exemption on GST for hotel rooms below ₹7,500 as a standalone exemption — instead, the previous exemption for rooms below ₹1,000 was abolished in recent years and is now part of the standard rate structure.

Is GST 2.0 (New GST Changes) Effective from September 2025?

Yes — the GST 2.0 reforms, including new hotel and restaurant GST rates, came into effect on 22nd September 2025. These structural changes continue to be effective and govern hotel taxation in 2026.

Accommodation, Food and Beverage Services GST Rate

• Hotel Room Tariff (≤ ₹7,500): 5% GST (No ITC)

• Hotel Room Tariff (> ₹7,500): 18% GST (With ITC)

• Restaurant/F&B Services in “Non-specified premises”: 5% (No ITC)

• Restaurant/F&B Services in “Specified premises”: 18% (With ITC)

• Spa/Wellness Services: 5% (No ITC)

• Banquets/Other Hotel Services: Generally 18% with conditions depending on services.  

GST Notification on Hotel Room Tariff

The government issued the official GST Notification No. 15/2025-CTR and related documents which formalize these hotel GST changes. Tax professionals and hoteliers can refer to the PDF for complete details and the legal text.

Note: Many news and tax advisory sites regularly publish the GST notification PDFs for quick download — search for “GST Hotel Room Tariff Notification PDF 15/2025-CTR” to find the official copy.

Impact on the Hotel Industry

✔ Benefits

• Lower GST (5%) for budget and mid-segment hotels makes stays more affordable, especially for domestic travelers.

• Simplified tax structure reduces litigation and confusion.

• Linking GST rates to actual value of supply (not declared tariff) improves compliance. 

✔ Challenges

• Loss of input tax credit for many services (especially in 5% slab businesses) increases cost burden.

• Mixed-category hotels must maintain detailed accounts to segregate rates and ITC. 

✔ Strategic Implications

Hotels with mixed pricing must adopt proper compliance systems and perhaps rethink pricing, invoicing, and category declarations — especially if they wish to be treated as “specified premises” for restaurant GST advantages.

Summary: Big GST Change for Hotels (2026)

✅ GST 2.0 is in effect from 22nd Sept 2025 and continues through 2026.
✅ Hotel room GST is now based on tariff value:

• 5% for rooms ≤ ₹7,500 without ITC. 

• 18% for rooms > ₹7,500 with ITC available. 
  ✅ Restaurant GST in hotels depends on hotel category (specified vs non-specified). 
  ✅ Spa/wellness and other services generally attract 5% GST (no ITC for budget services). 

These changes represent some of the most significant GST reforms in India’s hospitality sector since GST was introduced in 2017.