GST on Hotel & Guest House Accommodation: Current Legal Position

ACMA Bijaya Kumar Nath 09 Jun 2026 210 Views 0 comment Print Goods and Services Tax | Articles

The GST treatment of hotel, guest house, inn, club, campsite, and similar accommodation services has undergone significant changes since the introduction of GST in 2017. Initially, accommodation with a declared tariff below ₹1,000 per day was exempt from GST, while higher tariff categories attracted rates ranging from 12% to 28%. In 2019, the rate structure was simplified into two slabs—12% for accommodation above ₹1,000 but below ₹7,500 and 18% for accommodation of ₹7,500 or more. A major shift occurred in July 2022 when the exemption for accommodation below ₹1,000 was withdrawn, bringing all accommodation below ₹7,500 within the GST net at 12%. Subsequently, Notification No. 15/2025-Central Tax (Rate), effective from 22 September 2025, reduced GST on accommodation below ₹7,500 per unit per day to 5% without input tax credit, while retaining the 18% rate for accommodation priced at ₹7,500 and above, thereby reducing the tax burden on the hospitality sector.

GST on Hotel and Guest House Accommodation: Evolution of Taxability and the Current Legal Position

Current Legal Position

With effect from 22 September 2025, accommodation services provided by hotels, guest houses, inns, clubs, campsites and similar establishments are taxable under GST as follows:

Declared Tariff per Unit per Day	GST Rate
Declared Tariff Less than ₹7,500 per unit per day or equivalent	5% ( No ITC)
Declared Tariff ₹7,500 and above per unit per day or equivalent	18%

At first glance, the above tax position appears straightforward. However, the GST treatment of accommodation services has undergone multiple amendments since the introduction of GST in 2017. The concepts of exemption thresholds, and applicable tax rates have evolved through various notifications issued by the Government.

Accordingly, it becomes necessary to examine the legislative journey that has resulted in the present rate structure.

Legislative Framework

The GST treatment of hotel and guest house accommodation services has evolved through the following key notifications:

1. Exemption under Notification No. 12/2017-Central Tax (Rate)

Section 11 of the Central Goods and Services Tax Act, 2017 empowers the Government to exempt specified goods or services from GST in the public interest upon the recommendations of the GST Council.

In exercise of these powers, Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 granted exemption to various services. Entry No. 14 of the notification provided exemption to:

“Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having a declared tariff of a unit of accommodation below one thousand rupees per day or equivalent.”

Accordingly, accommodation services where the declared tariff of the room was below ₹1,000 per day were fully exempt from GST from the inception of GST.

2. GST Rate Structure under Notification No. 11/2017-Central Tax (Rate)

Notification No. 11/2017-Central Tax (Rate) prescribed GST rates for taxable accommodation services based on the declared tariff of the accommodation unit.

Declared Tariff per Unit per Day	GST Rate
₹1,000 and above but less than ₹2,500	12%
₹2,500 and above but less than ₹7,500	18%
₹7,500 and above	28%

Thus, accommodation having a declared tariff below ₹1,000 remained outside the tax net due to the exemption available under Entry No. 14 of Notification No. 12/2017.

3. Rationalisation through Notification No. 20/2019-Central Tax (Rate)

The Government subsequently rationalised GST rates on accommodation services through Notification No. 20/2019-Central Tax (Rate) dated 30 September 2019.

With effect from 1 October 2019, the rate structure was revised as follows:

Value of Supply of Accommodation	GST Rate
Above ₹1,000 but less than ₹7,500 per unit per day	12%
₹7,500 and above per unit per day	18%

The earlier three-tier structure was replaced with a simpler two-tier structure. However, accommodation services below ₹1,000 per day continued to enjoy exemption under Notification No. 12/2017.

4. Major Shift in Taxation – Notifications No. 03/2022 and 04/2022

A significant policy change was introduced through Notifications No. 03/2022-Central Tax (Rate) and No. 04/2022-Central Tax (Rate), both dated 13 July 2022.

(a) Amendment to GST Rate Notification

Notifications No. 03/2022 amended the rate entry relating to accommodation services by deleting the words:

“above one thousand rupees but”

As a result, the revised rate structure became:

Value of Supply of Accommodation	GST Rate
Less than ₹7,500 per unit per day	12%
₹7,500 and above per unit per day	18%

(b) Withdrawal of Exemption

Simultaneously, Notification No. 04/2022 omitted Entry No. 14 from Notification No. 12/2017 with effect from 18 July 2022.

Consequently, the exemption available to accommodation services having a declared tariff below ₹1,000 per day was withdrawn.

Combined Effect

The combined impact of these two notifications was that:

Accommodation services below ₹1,000 per day, which were previously exempt, became taxable.
All accommodation services having a value of supply below ₹7,500 per unit per day became taxable at 12%.
Accommodation services having a value of supply of ₹7,500 or more continued to attract GST at 18%.

The legislative intent was clearly to broaden the tax base by bringing lower-value accommodation services within the GST regime.

5. Further Rationalisation through Notification No. 15/2025-Central Tax (Rate)

The Government issued Notification No. 15/2025-Central Tax (Rate) dated 17 September 2025, effective from 22 September 2025, further revising GST rates applicable to accommodation services.

Pursuant to this amendment:

GST on accommodation services having a value of supply below ₹7,500 per unit per day was reduced from 12% to 5%.
Accommodation services having a value of supply of ₹7,500 or more per unit per day became taxable at 18%.

This revision represents a substantial reduction in the tax burden on the hospitality sector and is expected to improve affordability and encourage tourism and business travel.

Conclusion

Based on the above legislative evolution, the current GST position with effect from 22 September 2025 is as follows:

Value of Supply of Accommodation	GST Rate
Less than ₹7,500 per unit per day or equivalent	5% ( Without ITC)
₹7,500 and above per unit per day or equivalent	18%

The present tax structure is the result of a series of legislative changes beginning with the exemption framework introduced in 2017, followed by rate rationalisation in 2019, expansion of the tax base in 2022, and further rate reduction in 2025.

Accordingly, while the current GST rates appear simple, their proper understanding requires an appreciation of the legislative history that has shaped the taxation of hotel and guest house accommodation services under GST.