GST for hotels in India: the complete billing guide for 2026.

The GST slabs that apply to Indian hotels

GST on hotel accommodation in India is based on the declared tariff (the published room price before any discounts), not the amount actually paid. Three slabs apply:

• Below ₹1,000 per night: Exempt from GST. Budget lodges, dharmashalas, and very low-tariff properties.
• ₹1,000 – ₹7,499 per night: 12% GST (6% CGST + 6% SGST for intrastate, 12% IGST for interstate)
• ₹7,500 and above per night: 18% GST (9% CGST + 9% SGST for intrastate, 18% IGST for interstate)

The most common billing mistake: applying GST based on the discounted rate actually charged rather than the declared tariff. If your declared tariff is ₹8,000 but you're offering it at ₹6,500, you still apply 18% GST — not 12%. Many hotels get this wrong and face scrutiny during audits.

F&B served in the hotel restaurant is taxed separately: 5% GST for restaurants without air conditioning (no ITC), 5% for AC restaurants (no ITC), and 18% for restaurants inside hotels with a room tariff above ₹7,500 (with ITC available).

SGST, CGST, and IGST — which applies when

The split depends on whether the transaction is intrastate or interstate:

• Guest books and stays in the same state: SGST + CGST split (50/50 of the applicable rate). A ₹8,000 room in Uttarakhand booked by an Uttarakhand resident: 9% SGST + 9% CGST = 18% total.
• Guest is from a different state: IGST applies at the full rate (12% or 18%). A Delhi guest booking a Rishikesh resort: 18% IGST on a ₹8,000+ room.

In practice, most hotel PMS systems handle this automatically if they are correctly configured with your state code and the guest's billing address. If your PMS doesn't do this automatically, every invoice is a manual compliance risk.

TCS deducted by OTAs — what it means and how to claim it

Under Section 194-O of the Income Tax Act, OTAs are required to deduct 1% TCS (Tax Collected at Source) on bookings they facilitate. This means MakeMyTrip, Goibibo, and Booking.com deduct 1% from your payout before transferring it.

This TCS is not your tax liability — it's an advance collection that you can credit against your annual tax return. To claim it, you need:

• Form 26AS showing the TCS deductions made by the OTA
• Payout statements from each OTA showing booking amounts and TCS deductions
• Reconciliation between your PMS booking records and OTA settlement statements

GST on OTA commissions — how to handle input tax credit

When MakeMyTrip charges you 18% commission, they also charge 18% GST on that commission. This GST is an input tax you can claim as ITC (Input Tax Credit) against your output GST liability, provided:

• You are GST-registered
• The OTA provides a valid GST invoice with your GSTIN
• The commission expense appears in your GSTR-2A or GSTR-2B

For a hotel paying ₹4.7L/month in OTA commission at 18%, the GST on that commission is ₹84,600/month. That's a potential ₹10.1L per year in ITC — which many hotels fail to claim because their accounting system doesn't track OTA commission GST separately from the commission itself.

The e-invoicing requirement for hotels above ₹5 crore turnover

Hotels with annual aggregate turnover above ₹5 crore are required to generate e-invoices for B2B transactions. This means any folio issued to a company (with GSTIN) must go through the IRP (Invoice Registration Portal) and carry an IRN (Invoice Reference Number) and QR code.

Key points for hotel operations:

• B2C invoices (individual guests) are exempt from e-invoicing regardless of amount
• B2B invoices (corporate accounts, travel agents, companies) require e-invoicing above the threshold
• Your PMS must either integrate directly with the IRP or connect via a GSP (GST Suvidha Provider)
• Failure to e-invoice eligible transactions can result in penalties and loss of ITC for your corporate clients

If your current PMS doesn't handle e-invoicing automatically for corporate folios, this is a compliance risk that grows with every corporate booking you process.

The practical compliance checklist for hotel billing in 2026

• Confirm your declared tariff for each room category and ensure GST slabs are applied to declared tariff, not discounted rate
• Set up GSTIN capture for all B2B bookings at reservation stage (not at checkout)
• Configure SGST/CGST vs IGST logic in your PMS based on guest billing address state
• Maintain separate ledgers for: room GST collected, F&B GST collected, OTA commission GST paid (ITC), TCS receivable by OTA
• Reconcile OTA payout statements monthly against PMS booking records
• Enable e-invoicing integration if your annual turnover exceeds ₹5 crore
• File GSTR-1 (outward supplies) and GSTR-3B (monthly return) on time to avoid penalties and interest

A modern PMS like StayX handles most of this automatically — GST slab selection, GSTIN capture, SGST/CGST/IGST calculation, and e-invoicing integration. If your current system requires manual steps at any of these points, you are carrying compliance risk on every folio you generate.