Luxury Hotel Dining to Get Pricier as 18% GST Kicks In From April 1 | New Rules Explained

New Delhi: Starting April 1, 2025, dining at high-end hotels is set to become more expensive as restaurant services in hotels with room tariffs exceeding ₹7,500 per night will attract an 18% Goods and Services Tax (GST). The latest clarification from the Central Board of Indirect Taxes and Customs (CBIC) confirms that this tax will be levied with the benefit of input tax credit (ITC). The move is expected to impact guests opting for fine dining experiences at premium hotels across the country. Here’s what you need to know about the revised taxation rules.

What Defines a ‘Specified Premises’?

Under the revised framework, “specified premises” refer to hotels or properties where the per-night room rate exceeded ₹7,500 in the previous financial year. These establishments will be subject to the higher GST rate on restaurant services.

Can Hotels Opt to Be Categorized as ‘Specified Premises’?

Yes. Hoteliers can voluntarily classify their properties as “specified premises” by submitting a declaration between January 1 and March 31 of the preceding financial year. This replaces the earlier ‘declared tariff’ concept, which considered all amenities provided within the accommodation unit, such as furniture, air conditioning, and refrigerators, while excluding any discounts on published rates.

What GST Rate Applies to Other Restaurant Services?

For restaurant services outside “specified premises,” a reduced GST rate of 5% will continue to apply. However, this lower rate does not allow for input tax credit (ITC).

How Is ‘Specified Premises’ Status Determined?

The CBIC clarified that a hotel’s status as a “specified premises” for a financial year will be based on:- 

• The actual transaction value of hotel accommodations in the previous financial year.
• A voluntary declaration by the hotelier before the new financial year begins.
• Once designated as a “specified premises,” the classification remains unchanged throughout the financial year. Hotels that crossed the ₹7,500 per night threshold in 2024-25 will automatically be subject to the 18% GST rate on restaurant services for 2025-26.

Can a New Hotel Opt for ‘Specified Premises’ Status?

Newly registered hotels must submit an opt-in declaration within 15 days of obtaining GST registration if they wish to classify their premises as “specified.”

How Will GST Be Applied to Hotels with Multiple Properties?

For hotel groups operating multiple locations under a single GST registration, each individual premise will be assessed separately. The higher 18% GST rate will apply only to those properties where room rates exceeded ₹7,500 in the previous year or were voluntarily declared as “specified premises.”

With these changes, guests dining at luxury hotels should prepare for higher restaurant bills, while hoteliers must navigate the updated compliance requirements before the April 1 deadline.