GST on Hotel and Guest House Accommodation: Complete Legal Evolution and Current Rate Structure (2025)
Introduction
Accommodation services — spanning hotels, guest houses, inns, clubs, campsites, and comparable establishments — represent one of the most actively legislated segments under the Goods and Services Tax framework in India. Since GST came into force in 2017, this sector has witnessed a continuous recalibration of exemption thresholds, tax slabs, and input tax credit eligibility. The most recent development, brought about by Notification No. 15/2025-Central Tax (Rate) effective 22 September 2025, has further restructured the applicable rates, making it essential for businesses operating in the hospitality space to understand not just the present position but the entire legislative trajectory that gave rise to it.
This article traces the journey from the original exemption-centric framework of 2017 to the simplified dual-slab structure now in force, examining each notification that altered the legal landscape along the way.
Current GST Rate Structure on Accommodation Services (w.e.f. 22 September 2025)
Before delving into the legislative history, it is useful to state the present legal position clearly:
| Declared Tariff per Unit per Day | GST Rate | ITC Availability |
|---|---|---|
| Less than ₹7,500 per unit per day (or equivalent) | 5% | Not available |
| ₹7,500 and above per unit per day (or equivalent) | 18% | Available |
Important Note: The 5% rate applicable to accommodation below ₹7,500 per unit per day comes with a restriction on input tax credit. Establishments opting to charge GST at 5% cannot claim ITC on their inputs and input services. The 18% slab for higher-value accommodation does not carry this restriction.
Although the above structure appears clean and straightforward on its face, its correct interpretation demands familiarity with the sequence of legislative changes that have unfolded since 2017. Each change built upon — or reversed — what came before it, and disputes or assessments relating to prior periods necessarily require reference to the law as it stood at the relevant point in time.
Legislative Framework: Key Notifications Governing Accommodation Services
The GST treatment of hotel and guest house services has been shaped primarily by the following notifications issued under the Central Goods and Services Tax Act, 2017:
Notification No. 12/2017-Central Tax (Rate)dated 28.06.2017Notification No. 11/2017-Central Tax (Rate)dated 28.06.2017Notification No. 20/2019-Central Tax (Rate)dated 30.09.2019Notification No. 03/2022-Central Tax (Rate)dated 13.07.2022Notification No. 04/2022-Central Tax (Rate)dated 13.07.2022Notification No. 15/2025-Central Tax (Rate)dated 17.09.2025
Each of these instruments is examined below in chronological order.
Phase 1: The Original Framework (June 2017)
Exemption Under Notification No. 12/2017-Central Tax (Rate)
The power to exempt specific goods or services from GST vests with the Central Government under Section 11 of the Central Goods and Services Tax Act, 2017, exercisable on the recommendations of the GST Council in the public interest.
Utilising this power, Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 carved out a blanket exemption for budget accommodation. Entry No. 14 of this notification read as follows:
"Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having a declared tariff of a unit of accommodation below one thousand rupees per day or equivalent."