Hotel Stay Could Now Cost You More: New GST Rules Mean 18% Tax for High-End Rooms and Dining

Starting April 1, 2025, travelers booking premium hotel rooms or dining at upscale hotel restaurants may need to brace for a higher Goods and Services Tax (GST). The Indian government has revised GST norms, particularly targeting hotels that fall under the category of “Specified Premises.” If you're staying at a hotel where room rates are ₹7,500 or more per night, you’ll now have to pay 18% GST on restaurant bills—up from the earlier 5%.

This change not only impacts how much guests pay for meals but also alters how hotels manage their taxation and pricing models.

What Are “Specified Premises”?

Under the new GST rules, "Specified Premises" refers to hotels meeting any of the following criteria:

• If the room tariff exceeds ₹7,500 per night (in the previous financial year).

• If the hotel voluntarily declares itself as a Specified Premise between January 1 and March 31, 2025.

• For newly registered hotels, a declaration must be made within 15 days of registration regarding their category status.

Once categorized as a Specified Premise, the hotel’s in-house restaurant services will attract 18% GST. However, they will also be eligible for Input Tax Credit (ITC), which allows businesses to offset their tax liability against GST paid on inputs like raw materials and other purchases.

GST Rates Breakdown for Hotels

Hotel Category	GST Rate	Input Tax Credit (ITC)
Specified Premises	18%	Available
Non-Specified Premises	5%	Not Available

This means that a high-end hotel offering rooms above ₹7,500 per night will now charge 18% GST on dining, while smaller hotels can continue charging 5%, but they won’t be able to claim ITC.

How Will This Affect Customers?

If you’re someone who frequently stays in luxury hotels and dines at their restaurants, your bill is likely to increase. For example, a ₹5,000 restaurant bill at a Specified Premise will now attract an additional ₹900 in tax instead of ₹250.

This will also impact business travelers and corporate events, where meetings and conferences are often hosted in high-end hotels. The cost of organizing such events may rise significantly due to the increased tax burden.

However, if hotels pass on the benefits of ITC to customers through strategic pricing, the net increase in cost could be reduced. Still, how much of this benefit is passed on will vary from hotel to hotel.

What About Food Delivery?

Another significant change applies to food delivery services. If you order food from a Specified Premise via platforms like Zomato or Swiggy, the hotel itself will now be responsible for collecting and paying GST.

For Non-Specified Premises, there’s no change—e-commerce platforms will continue to handle GST payments as before.

Impact on the Hospitality Industry

This GST revision brings more clarity and structure to tax regulations within the hotel industry. By clearly defining hotel categories and their respective tax obligations, the government aims to simplify compliance.

Large hotels that fall into the Specified Premise category might welcome this change due to the availability of ITC, allowing them to claim credits on their purchases and reduce overall tax outgo. Meanwhile, smaller hotels may prefer to continue with the 5% GST slab, albeit without ITC benefits, to remain price-competitive.

Bottom Line: Check Before You Book

With these changes in effect, it’s wise to check the hotel’s room rate and category before booking or dining. A hotel room priced just over ₹7,500 could significantly increase your restaurant and event bills due to the 18% GST rate.

In short: your next hotel stay might come with a higher tax tag—unless you’re careful about where you book and dine.