Starting April 1, 2025, restaurant services in hotels charging over ₹7,500 per night will be taxed at 18% under GST. This change comes after a clarification from the Central Board of Indirect Taxes and Customs (CBIC).
Previously, hotel restaurants charged 5% GST without Input Tax Credit (ITC). However, from April, if the room tariff exceeds ₹7,500 per night, the restaurant service will be treated as part of the hotel supply, attracting 18% GST with ITC.
What changes from April?
Hotels charging ₹7,500+ per night will apply 18% GST on food and beverages.
The rule applies only to in-house restaurants within these hotels.
Independent restaurants and hotel restaurants with room tariffs below ₹7,500 remain at 5% GST.
Businesses must update GST registrations and invoices accordingly.
Why the tax hike?
The government aims to align restaurant taxation with hotel services under GST laws. It also ensures that luxury hotels benefit from Input Tax Credit (ITC), which was previously unavailable for restaurants charging 5% GST.
Impact on customers and businesses
For customers:
Dining at premium hotels will become more expensive.
Bills will reflect higher GST rates, especially in five-star hotels.
For hotels & restaurants:
Hotels must revise billing systems and tax calculations.
Businesses must update GST filings to claim ITC benefits.
Smaller hotels and standalone restaurants will remain unaffected.
What should businesses do?
Hotels must check room tariffs and classify GST correctly.
Restaurant bills in high-end hotels should reflect 18% GST.
Accountants should update GST records for accurate tax filings.
Customers should verify GST rates on their final bills.
The new GST rules aim to simplify tax structures but could increase dining costs in premium hotels. Businesses should prepare early to ensure smooth compliance.
