The GST framework for hotel accommodation and restaurant services has been revised, effective April 1, 2025, as per Notification No. 05/2025 – Central Tax (Rate). The concept of “declared tariff” is replaced with actual transaction value for determining GST rates. Hotels offering accommodation above ₹7,500 per day are automatically classified as “specified premises,” enabling them to charge 18% GST with Input Tax Credit (ITC) on restaurant services. Hotels with lower tariffs or standalone restaurants remain subject to 5% GST without ITC. To opt into the “specified premises” classification, registered hotels must submit Annexure VII between January 1 and March 31 of the preceding financial year, while new registrants can declare using Annexure VIII within 15 days of GST registration acknowledgment. Opting out requires filing Annexure IX within the same timeframe. Separate declarations must be filed for each premises through the GST portal, and timely submissions are essential to secure the desired classification for the upcoming financial year. Once classified, the status continues unless a fresh declaration is submitted. Premises not filing declarations or with accommodation tariffs ≤ ₹7,500 are treated as non-specified, with restaurant services attracting 5% GST without ITC. The new rules aim to streamline compliance and provide clarity, allowing businesses to align their classifications with operational needs while ensuring adherence to timelines for filing declarations.
Comparative Table: GST Rates Before and After April 1, 2025
| Category | GST Rate Before April 1, 2025 | ITC Availability | GST Rate After April 1, 2025 | ITC Availability |
| Hotel Accommodation (Declared Tariff > ₹7,500) | 18% | Allowed | 18% (Actual value > ₹7,500) | Allowed |
| Hotel Accommodation (Declared Tariff ≤ ₹7,500) | 12% | Allowed | 12% (Actual value ≤ ₹7,500) | Allowed |
| Restaurant Services in Hotels (Declared Tariff > ₹7,500) | 18% | Allowed | 18% (Specified premises) | Allowed |
| Restaurant Services in Hotels (Declared Tariff ≤ ₹7,500) | 5% | Not Allowed | 5% (Non-specified premises) | Not Allowed |
| Standalone Restaurants | 5% | Not Allowed | 5% | Not Allowed |
Key Changes:
- The concept of “declared tariff” has been removed; GST rates are now based on the actual transaction value.
- Hotels can opt to classify their premises as “specified” by filing the appropriate declaration, allowing them to charge 18% GST with ITC on restaurant services, regardless of room rates.
- The option to opt in or out of the “specified premises” classification must be exercised within the stipulated timeframes using the designated annexures.
1. Understanding “Specified Premises”
A “specified premises” refers to:
1.Automatically Classified: Premises where, in the preceding financial year, any unit of accommodation was supplied at a value exceeding ₹7,500 per unit per day.
2. Opt-In Classification: – Registered Persons: Can declare premises as “specified” by submitting Annexure VII between January 1 and March 31 of the preceding financial year (i.e., Jan–Mar 2025 for FY 2025–26).
– New Registrants: Can declare premises as “specified” by submitting Annexure VIII within 15 days of obtaining acknowledgment for the registration application.
2. Declaration Forms and Timelines
Annexure VII – Opt-In for Registered Persons
Who: Registered persons supplying hotel accommodation services.
When: File between January 1 and March 31 of the preceding financial year (i.e., Jan–Mar 2025 for FY 2025–26).
Effect: The premises will be treated as “specified” for the upcoming financial year and subsequent years unless an opt-out declaration is filed.
Submission: Submit separately for each premises to the jurisdictional GST authority.
Annexure VIII – Opt-In for New Registrants
Who: Persons applying for GST registration intending to supply hotel accommodation services.
When: File within 15 days of obtaining acknowledgment for the registration application.
Effect: The premises will be treated as “specified” from the effective date of registration till the end of the financial year, and continue in subsequent years unless an opt-out declaration is filed.
Submission: Submit separately for each premises to the jurisdictional GST authority.
Annexure IX – Opt-Out Declaration
Who: Registered suppliers of hotel accommodation services wishing to declassify premises as “specified”.
When: File between January 1 and March 31 of the preceding financial year.
Effect: The premises will not be treated as “specified” for the upcoming financial year and subsequent years unless a new opt-in declaration is filed.
Submission: Submit separately for each premises to the jurisdictional GST authority.
3. Key Points to Remember
- Separate Declarations: Each premises requires a separate declaration form.
- Timely Submission: Adhere strictly to the filing timelines to ensure the desired classification for the financial year.
- Continuity: Once a premises is classified as “specified” or “not specified,” the status continues in subsequent financial years unless a new declaration is filed.
- If no declaration is filed, and the accommodation tariff is ≤ ₹7,500, the premises will be treated as non-specified, and restaurant services will attract 5% GST without ITC.
- The declaration must be furnished electronically on the common GST portal.
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