The GST Council has announced a revision of GST rates for the hotel industry, effective 22nd September 2025. In order to ensure correct compliance, we seek your kind clarification on the following points: 1. Is the revised GST rate applicable only to accommodation services, or does it also extend to restaurant and banquet (F&B) services? 2. Has any official notification been issued by the GST Department regarding this rate revision? If yes, kindly share a copy for our reference. 3. Where a hotel supplies rooms below ₹7,500 in some cases and above ₹7,500 in others, what GST rates should be applied to: • Accommodation services • Restaurant services • Banquet services Additionally, please clarify how Input Tax Credit (ITC) eligibility will be determined in such mixed scenarios. 4. For room tariffs below ₹7,500, can we continue to charge 12% GST with full ITC, or is it mandatory to apply 5% GST without ITC?
1. it's only applicable on accomodation service unless it's MAP tariff than food is also part of composite supply
2. Yes it's issued 2 days back
3. It will only apply to room tariff charged. Anything billed seperately will have 18% rate
4. As per department FAQ only have one option to charge mandatory 5% without IGST
Hi,
In reference to your query, please note as follows:
1. The revised rate is applicable only on accommodation services. Restaurant and F&B services will continue with the same taxability as before.
2. The same has been notified vide Notification No.15/2025-Central Tax (Rate), dated 17th September, 2025.
3. In case of room tariffs below 7,500 GST @ 5%, otherwise @ 18%. Restaurant and F&B services will continue with the same taxability as before. Additionally please note, Spa, health club, beauty parlour services have shifted to 5% without ITC bracket.
In so far as claim of ITC is concerned, the same now becomes a monthly exercise to be done after the end of the relevant period. ITC claim would now be available on the basis of turnover as Per Section 17 r/w Rules 42 & 43.
The proportion would need to be identified at the end of every month and accordingly claim to be made.
4. It is mandatory to apply 5% GST without ITC.
Please connect in case any further details are required to be discussed.
Thanks & Regards,
CA Aditya Dhanuka.
https://www.linkedin.com/in/aditya-dhanuka-69824451/
The GST rate changes for the hotel industry effective September 22, 2025, primarily target accommodation services with specific provisions for Input Tax Credit eligibility. Here are the clarifications for your compliance requirements:
Accommodation Services Only: The revised GST rates apply exclusively to hotel accommodation services where room tariffs are ₹7,500 or below per unit per day. Restaurant, banquet, and other Food & Beverage services continue to attract the existing GST rates regardless of the room tariff charged.
F&B Services Remain Unchanged: Restaurant and banquet services in hotels will continue to be taxed at 18% GST with full Input Tax Credit, irrespective of whether the hotel charges room tariffs above or below ₹7,500.
For hotels supplying rooms both below and above ₹7,500:
Accommodation Services:
Rooms ≤ ₹7,500 per day: 5% GST without ITC (mandatory rate)
Rooms > ₹7,500 per day: 18% GST with full ITC
Restaurant Services: 18% GST with full ITC regardless of room tariff
Banquet Services: 18% GST with full ITC regardless of room tariff
For hotels with mixed room tariffs, ITC eligibility becomes a monthly exercise based on turnover proportions as per Section 17 read with Rules 42 and 43. The proportion must be calculated at the end of every month to determine eligible ITC claims.
Room tariffs below ₹7,500 must mandatorily attract 5% GST without ITC. The Finance Ministry has clarified through FAQs that "the option to pay GST at 18% with ITC is not available for such units". This represents a change from the previous 12% rate with ITC that applied to this tariff segment.
Additional Services: Spa, health club, and beauty parlour services have also been shifted to the 5% bracket without ITC.
The changes aim to provide relief to budget accommodation while maintaining the tax structure for premium hotel services, though industry associations have raised concerns about increased operating costs due to ITC restrictions.
I checked all the notifications, I cannot find any point relating to Hotel Accommodation services in any of the notifications. I was only able to find some points in (FAQs) published by Ministry of Finance. Should we change the taxes based on FAQs? or is there any notification, it will be great help if you can share the link for notification an mention the point which should be referred for this. Also would like to ask - The GST rates for aerated drinks have been increased to 40%. Do hotels and restaurants have to apply 40% on soft drinks if served in restaurant or will it apply same rate as F&B services? Do the 40% rate also apply on Mocktails made with areated drinks?
Only in FAQs: Hotel accommodation changes are NOT in official CBIC notifications - only mentioned in FAQ No. 71 from Ministry of Finance.
Legal Status: FAQs are clarifications only, not legally binding like notifications. Implementation questionable without formal CBIC notification.
40% GST: Applies when sold as goods.
Restaurant Service: When served as part of F&B service:
18% GST (as restaurant service, not goods rate)
Mocktails: Also 18% GST as prepared service
Wait for Official Notification: Since no CBIC notification exists for hotels, recommend waiting for formal notification before implementing changes. FAQs alone insufficient for legal compliance.
Aerated Drinks: Apply service rates (18%) when served in restaurants, not goods rate (40%).