GST Rules for Hotels: ITC, Filing & Invoices

Your MMT settlement lands in the bank account and three lines are missing from what you expected: TDS, TCS and an OTA commission invoice with 18% GST. Your accountant asks for the GSTR-1 data but you are not sure which sales go where. These are the hotel GST rules questions this guide answers: when you can claim ITC, what a valid invoice must show, which return to file and by when, and how OTA commission GST works.

GST Rates for Hotels: Quick Summary

Rooms priced up to ₹7,500 per night: 5% GST, no ITC. Rooms above ₹7,500: 18% GST, ITC available. Both slabs are based on the actual price charged to the guest. For slab examples, lodge and resort rates, F&B rules and worked calculations see the full GST rate guide for hotel rooms.

Input Tax Credit (ITC) for Hotels: What You Can Claim

Input Tax Credit (ITC) lets you offset GST paid on purchases against GST owed on room revenue. Hotels in the 5% slab cannot claim it at all.

ITC-eligible expenses:

• Furniture, fixtures, equipment, linen and room amenities
• Technology: PMS, booking engine and channel manager subscriptions
• Professional services: accounting, legal, marketing
• Maintenance and housekeeping contracts
• OTA commission invoices (18% GST on commission, Indian OTAs)

ITC is blocked on: staff food, personal accommodation, motor vehicles and any inputs used exclusively for 5% room categories (Section 17(5) CGST Act).

ITC on Hotel Stay: Business Traveller Claims

A GST-registered business can claim ITC on an employee's hotel stay only when all four conditions are met:

1. The room was charged at 18% GST, i.e. the actual price per night was above ₹7,500. Rooms in the 5% slab carry no ITC for either party.
2. The hotel issues a proper B2B tax invoice with the company's GSTIN on it.
3. The stay is for a genuine business purpose, not a personal trip.
4. The stay is not in a blocked category under Section 17(5).

If any condition fails, the ITC is blocked. Common failures: the room was in the 5% slab (no ITC for any party), or the hotel issued a B2C receipt because the guest did not give their company GSTIN at check-in. Hotel accommodation is always taxed as CGST plus SGST of the hotel's state, so a business can claim it only through a GST registration in that state. Otherwise the GST is a cost.

OTA bookings: The guest still needs the hotel's B2B tax invoice for ITC. Make sure your PMS can issue one in the company's name even on OTA bookings.

GST Invoice Requirements for Hotels

Every GST invoice from your hotel must contain these fields. A missing field makes it non-compliant and blocks ITC for the recipient.

1. Hotel name, address and GSTIN: Exactly as registered in GST records.
2. Sequential invoice number: A unique series. Gaps or resets create audit issues.
3. Invoice date: Typically the check-out date for accommodation.
4. Guest or company name, address and GSTIN: Required for B2B invoices; name and address only for B2C.
5. Taxable value: The room rate before GST.
6. GST breakdown: CGST plus SGST, shown separately. SAC code 9963 applies to all hotel accommodation and F&B services.
7. Total amount: Taxable value plus GST.

Place of Supply: CGST/SGST vs IGST

Hotel accommodation always uses the hotel's location as the place of supply, under Section 12(3) of the IGST Act. This applies regardless of where the guest is from: a Delhi guest staying in a Jaipur hotel is taxed under CGST plus Rajasthan SGST, not IGST. Restaurant and room service follow the same rule.

Never charge IGST on a hotel room bill. Even for a corporate client from another state, the invoice must show CGST plus your state's SGST.

GST Filing: GSTR-1, GSTR-3B and GSTR-9

GST-registered hotels must file three returns. Missing a deadline triggers a penalty and interest.

Return	What it covers	Frequency	Due date
GSTR-1	Details of all outward supplies (your sales)	Monthly	11th of the next month
GSTR-3B	Summary return with tax payment	Monthly	20th of the next month
GSTR-9	Annual consolidated return	Yearly	31 December of the following year

Hotels with annual turnover below ₹5 crore can opt for the QRMP (Quarterly Return Monthly Payment) scheme: quarterly GSTR-1 and GSTR-3B with monthly payments via PMT-06.

Hotels on OTAs must also reconcile TCS deducted by each OTA. This credit appears in your GSTR-2A/2B and should be matched monthly. See the TDS & TCS guide.

GST on OTA Commissions

OTAs charge hotels commission for bookings. This commission is a service, and GST applies at 18%. The rules differ slightly between Indian and foreign OTAs.

Indian OTAs: MakeMyTrip, Goibibo, Booking.com India

Indian OTAs issue a tax invoice with 18% GST on their commission. A GST-registered hotel receives this invoice and can claim the GST as ITC against its own output liability.

Foreign OTAs: Agoda, Expedia, Airbnb (billed from overseas)

When a foreign OTA bills you from outside India, no Indian GST appears on their invoice. Instead, you must account for the tax yourself under the Reverse Charge Mechanism (RCM).

Under RCM:

• You calculate 18% IGST on the foreign OTA's commission amount.
• You pay this IGST directly to the government (not to the OTA).
• You can then claim this same amount back as ITC in the following tax period, subject to normal ITC conditions.
• Declare this in Table 3.1(d) of GSTR-3B as RCM supplies.

Common GST Mistakes by Hotels

1. Applying the wrong slab: Charging 18% on rooms priced below ₹7,500, or forgetting to move to 18% when rates cross the threshold during peak season.
2. Issuing B2C receipts for corporate guests: If the front desk does not collect the company GSTIN, the guest loses ITC and disputes the invoice. A corrected invoice with a credit note creates paperwork and delays.
3. Charging IGST on room bills: Hotel accommodation place of supply is always the hotel's state. The tax is always CGST plus SGST, never IGST.
4. Missing ITC reversals under Rule 42: Hotels with both 5% and 18% room categories must reverse a proportionate share of ITC on common expenses. This creates a shortfall in GSTR-9 if ignored.
5. Missing RCM for foreign OTAs: Agoda and other OTAs billing from outside India require you to self-declare 18% IGST under reverse charge. Many hotels skip this entirely, which surfaces during assessment.

Frequently Asked Questions