GST on Hotel Rooms: Rate, SAC Code and the Rs 7,500 Rule

GST on hotel rooms: where the Rs 7,500 line falls

Room rent in a hotel has only two rates now. The deciding figure is the value of supply of one unit of accommodation for one day. If that value is Rs 7,500 or less, the rate is 5% and the hotel gives up input tax credit on what it buys for those rooms. If the value goes even one rupee above Rs 7,500, the rate is 18% and the hotel keeps its credit.

Service rates are listed in notification 11/2017-Central Tax (Rate), and hotel stay has its own entry there. The current figures came in when notification 15/2025-Central Tax (Rate) amended that list. The rate printed in the notification is only the central tax. The guest pays double that, as CGST plus SGST.

SAC 996311 and the other codes in heading 9963

Every service code begins with the pair 99. Together with the next two digits it forms heading 9963, which covers stay and food. The fifth digit 1 marks room stay, and the last digit narrows it to hotels and similar places. Read in full, 996311 means room accommodation in hotels, inns, guest houses and clubs.

A PG or hostel owner should not copy the hotel rate without checking the entries that apply to that stay. Renting a shop or office is a different service again; see the rent code page.

How the room value per day is measured

Most wrong rates on hotel bills come from measuring the wrong number. Keep these points in mind:

• Actual charge, not rack rate. A room whose listed rate is above Rs 7,500 but which is sold below that line after a discount is taxed at 5%. A room usually sold below the line but charged above Rs 7,500 in a festival week is taxed at 18%.
• Per unit, not per bill. Three rooms, each charged below Rs 7,500, can add up to a bill far above that figure, yet all three take 5%.
• Per day, not per stay. A long stay may total many times Rs 7,500, but if the daily value of the room is below the line, 5% applies.
• Each day stands alone. If the charge changes during a stay, check each night separately. One night may be 5% and the next 18%.

Writing hotel room rent on the tax invoice

Hotel stay is linked to immovable property, so the place of supply is where the hotel is located. A hotel in one state charges CGST and SGST of that state to every guest, including a company registered in another state. IGST does not appear on a normal room bill.

Show the tariff per night on the invoice line. That makes it clear which slab applies, both for the guest and for anyone checking the bill later.

Both lines have the same taxable value, but the tax differs because the value per night falls on different sides of Rs 7,500.

A hotel whose turnover is Rs 5 crore or less may print 9963 on business invoices; above that level, print 996311. Using all six digits is always fine. Ask for the guest's GSTIN at check-in when the stay is for business, so the invoice can carry it. The rules on digits are explained on the HSN digits page.

Input tax credit for the hotel and for the business guest

The 5% rate is offered on the condition that the hotel does not take credit of tax paid on inputs and input services used for those rooms. Linen, toiletries, repairs and similar purchases for such rooms then become a cost. At 18% the hotel claims credit in the normal way. A hotel that sells rooms on both sides of the line must split its credit between the two; a GST practitioner can help set up that working.

The no-credit condition binds the hotel, not the guest. A registered business that sends staff on work travel can usually claim the GST on the room bill as credit, provided the invoice carries its GSTIN for the state where the hotel stands. If the company has no registration in that state, it cannot use the CGST and SGST on that bill.

New GST rate on hotel room rent after the reform

Before 22 September, rooms valued up to Rs 7,500 a day paid 12% with credit. Under the two-slab structure that band moved to 5% without credit. Rooms above Rs 7,500 stayed at 18%, so bills for costlier rooms look the same as before.

Low-tariff rooms once enjoyed an exemption, but it ended earlier, and such rooms now fall in the 5% band like any other room up to Rs 7,500. Tariff sheets and billing settings still set at 12% need correcting before the next bill goes out. Other services that moved on the same day are listed under GST rate changes.

Food, booking fees and other lines on a hotel bill

Not every line on the folio follows the room rate. Food served in the hotel restaurant or as room service goes under SAC 996332 and follows the restaurant GST rules: 5% without credit, or 18% with credit where the hotel counts as specified premises. A travel agent's or booking agent's commission is billed by that agent at 18%; see the commission code page. Tour packages that bundle stay with travel are covered on the travel and tour page.