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FlipStay blog · 14 October 2026 · updated 22 October 2026

Hotel GST in India: Rates, CGST/SGST, and Invoicing

Understand Indian hotel GST slabs, 5% and 18% rates, CGST vs SGST splits, SAC codes, and mandatory invoice rules for small hotels and homestays.

Running a small hotel or homestay in India requires navigating strict GST rules, split tax rates, and strict invoice requirements. Calculating taxes manually across room nights, restaurant meals, and corporate check-ins often leads to errors that complicate monthly tax filings.

Here is how the Goods and Services Tax (GST) applies to independent accommodations in India, how to handle the common tax slabs, and what must appear on every guest invoice.

Understanding the Slabs: Accommodation, Dining, and SAC Codes

Goods and Services Tax in India classifies hotel operations under Services Accounting Codes (SAC). Accommodation and restaurant services carry different codes and different tax rates.

Room accommodation falls primarily under SAC 996311. The rate depends on the price you actually charge per room per day (after discounts):

In October 2026 the GST Council also recommended allowing limited ITC for hotels in the ₹7,500-and-below band on purchases in the same line of business. Check with your accountant whether and from when this applies to you.

Food and beverage sales follow different rules. Standalone restaurant dining, room service, and food prepared on-site generally attract a flat 5% GST rate under SAC 996331, provided the property does not claim Input Tax Credit (ITC) on inputs. However, restaurant service (including room service) is taxed at 18% with full ITC when it is supplied from "specified premises": a property that sold any room above ₹7,500 per day in the previous financial year, or one that has opted in by filing a declaration (between 1 January and 31 March, for the next financial year).

Because small hotels and homestays frequently sell both rooms and food, your billing system must separate these items onto distinct line items with their respective SAC codes and rates. Always verify your property classification and input tax credit status with your accountant.

Intra-State vs Inter-State: Splitting CGST, SGST, and IGST

GST is a destination-based tax. For hotel accommodation, Section 12(3) of the IGST Act establishes that the place of supply is always the location of the immovable property—the hotel itself.

Because the hotel and the place of supply are in the same state, most hotel transactions are treated as intra-state supplies. This means you do not levy a single unified GST rate. Instead, you split the tax equally into two components:

For example, if a 5% tax applies to a meal, the bill must show 2.5% CGST and 2.5% SGST. If an 18% tax applies to a luxury suite, the bill must show 9% CGST and 9% SGST.

A corporate guest registered in another state does not change this. The place of supply for a hotel stay is always the hotel's location, so you charge CGST and SGST even when the company's GSTIN is from another state; you cannot switch to IGST on request. The company can only claim that credit through a GST registration in your state, so ask whether it has a local branch GSTIN. Clarify your corporate billing workflow with your chartered accountant.

What Must Appear on a Legal Tax Invoice

Under Rule 46 of the CGST Rules, an invoice issued by a registered hotel must contain specific data points to be considered valid by tax authorities. Missing even one field can invalidate the document for business guests seeking Input Tax Credit.

A compliant tax invoice must include:

  1. Supplier details: Legal trade name, registered property address, and 15-digit GSTIN of the hotel.
  2. Serial invoice number: A consecutive serial number of up to 16 characters, unique for the financial year, containing only letters, numbers, and hyphens or slashes.
  3. Date of issue: The date the bill is finalized and handed to the guest.
  4. Recipient details: For B2B guests, record the legal business name, address, state and 15-digit GSTIN. For unregistered guests, name, address and state (with state code) are mandatory when the bill is ₹50,000 or more, or when the guest asks for them to be recorded.
  5. Description and SAC code: Each line item should state the service provided (e.g., "Standard Room Accommodation" or "Room Service Dinner"). The SAC is mandatory on invoices to GST-registered guests (4 digits, e.g. 9963, if your turnover is up to ₹5 crore) and on every invoice once turnover exceeds ₹5 crore (6 digits, e.g. 996311 or 996331). Showing it on every bill is good practice.
  6. Itemised tax breakdown: The taxable value of the service, the rate of CGST and SGST (or IGST), and the exact rupee amount of tax charged per line.
  7. Total amount payable: The gross bill total in figures (Rule 46 does not require it in words).
  8. Authorized signature: A signature or digital signature of the supplier or an authorised representative. An electronic invoice issued under the Information Technology Act, 2000 needs no signature.

Using a modern property management tool eliminates manual math errors on these invoices. For example, FlipStay has a ready-made India setup that picks the 5% or 18% slab from the nightly rate, splits it into CGST and SGST, prints SAC 996311 on the room line and produces a PDF tax invoice. Check its numbering and fields against Rule 46 with your accountant.

Worked Example: Room Night Plus Dining on One Bill

Consider a guest staying in an executive room priced at ₹8,000 per night who also orders ₹1,200 worth of room service dinner from your kitchen. The property operates in Maharashtra and the guest is a local walk-in.

Here is how the invoice calculation breaks down:

1. Accommodation

2. Food & Beverage (Room Service)

3. Final Invoice Summary

If none of your rooms sold above ₹7,500 in the previous financial year (and you have not opted in), room service would instead be 5% without ITC: ₹30 CGST + ₹30 SGST, for a total invoice of ₹10,700.

Showing these lines distinctly protects your property during tax audits and ensures clear billing for the customer.

What to do this week

  1. Audit your printed bill template: Check your recent check-out bills against the Rule 46 requirements. Ensure your GSTIN, consecutive invoice numbering, SAC codes, and separate CGST/SGST lines appear clearly.
  2. Review your food billing classification: Confirm with your tax advisor whether your restaurant operations qualify for the 5% rate without ITC or if higher room tariffs push your dining services into the 18% bracket.
  3. Automate your invoicing: Stop calculating 2.5% and 9% splits on paper. You can set up your property on FlipStay in minutes; at checkout it works out the CGST and SGST lines and produces an itemised PDF invoice.

Frequently asked questions

Does a small hotel need to register for GST if annual revenue is low?

Thresholds in India generally require registration once aggregate turnover exceeds ₹20 lakh per year (₹10 lakh in Manipur, Mizoram, Nagaland and Tripura). Listing on online travel agencies (OTAs) does not by itself force a small property to register: if you are below the threshold and not registered, the OTA pays the GST on rooms booked through it. Once you cross the threshold, you must register and charge GST on all bookings yourself. Consult your chartered accountant to determine your exact registration requirement.

Can a hotel issue one consolidated receipt without SAC codes?

It depends on your turnover and the guest. If your annual turnover is above ₹5 crore, every tax invoice must show the 6-digit SAC (996311 for rooms, 996331 for restaurant and room service), and invoices to GST-registered businesses must also be e-invoices with an IRN and QR code. Up to ₹5 crore, a 4-digit SAC (9963) is mandatory on invoices to GST-registered businesses and optional on bills to other guests. Business guests need the code to claim credit, so it is good practice to show it on every bill.

How should cancellations and no-show fees be taxed?

Under CBIC Circular 178/10/2022-GST, cancellation and retention charges are treated as part of the payment for the booking itself, not as a separate fee for "tolerating" a cancellation. So they generally attract the same rate of GST as the underlying room booking. The invoice should record the retention fee along with the applicable CGST and SGST.

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