Your food at hotels to attract 18% GST if room charges over ₹7500

Guests staying at hotels with room tariffs of ₹7,500 or more per night will face a higher tax burden, as the Government of India has enforced a new rule mandating 18% GST on food bills in such establishments, which came into effect as of April 1.

According to a circular issued on March 27, 2025, the rule applies to specified hotels that officially register under this new GST classification. 

Guests dining at these hotels will be charged 18% GST on food and beverages, compared to the standard 5% GST applicable at non-specified or general category hotels.

To obtain specified hotel status, hotel owners must apply between January 1 and March 31 each year. Once approved and declared within 15 days of registration, these hotels become eligible to claim input tax credit (ITC), allowing them to recover GST paid on goods and services used in the business.

The rule aims to formalise tax compliance but is likely to affect business meetings, conferences, and high-end stays, where costs may rise by 15% or more due to increased tax rates.

Hotels must be cautious when setting room tariffs: If even one room exceeds ₹7,500 per night, the entire hotel will fall under the 18% GST bracket for food services.

The input tax credit benefit may help offset increased costs for hotel operators, but customers will still experience a visible rise in food bills.

Many hoteliers may need to reassess pricing strategies and inform customers in advance to avoid dissatisfaction or confusion.