Published 7 October 2026
A meal at a café and the same meal in a hotel’s restaurant can carry different GST. A hotel room at Rs 7,000 a night and one at Rs 8,000 also carry different GST, and in a way that changed in 2025. This article explains the rates that apply to eating out and staying in hotels, and why they depend on where the service is supplied.
The rates are set by Notification No. 11/2017-Central Tax (Rate), as amended. The figures below are totals: central tax plus an equal State tax.
Restaurants: 5 per cent, or 18 per cent
Most restaurants charge 5 per cent. The notification fixes that rate for “restaurant service” supplied anywhere other than at specified premises. The rate comes with a condition: the restaurant must not take input tax credit on the goods and services it uses to supply the service. A 5 per cent restaurant therefore cannot reclaim the GST it pays on its own purchases. That is the price of the lower rate.
Restaurants at specified premises charge 18 per cent, with input tax credit. This is the case that catches people out: a restaurant inside a hotel, where the hotel’s room rates make it specified premises.
What makes premises “specified”
Since 1 April 2025, by Notification No. 05/2025-Central Tax (Rate), premises are specified premises in three cases:
- the supplier provided, in the preceding financial year, hotel accommodation with a value “above seven thousand five hundred rupees per unit per day or equivalent” from those premises
- the supplier has filed a declaration choosing to treat the premises as specified
- a further case, for new registrations, set out in the notification
Before April 2025, the test was the declared tariff of a room. It is now the value actually charged in the previous year, or the supplier’s own declaration. A hotel that let any room above Rs 7,500 a night last year makes its restaurant an 18 per cent restaurant this year.
Hotel rooms: 5 per cent, or 18 per cent
The rate on hotel accommodation turns on the value of the room per night.
- Up to Rs 7,500 per unit per day: 5 per cent, from 22 September 2025, without input tax credit. Notification No. 15/2025-Central Tax (Rate) cut this from 12 per cent. It also made the lower rate compulsory, so the hotel cannot choose 18 per cent with credit instead.
- Above Rs 7,500 per unit per day: 18 per cent, unchanged.
The figure is the value of supply of “a unit of accommodation”, meaning the room, per day. It is not the total bill for a stay.
Outdoor catering
Catering for a wedding or event is charged at 5 per cent, without input tax credit, under the same notification. That applies where it is supplied away from specified premises by a caterer that neither runs specified premises nor is located in them. The same rate applies where catering is supplied together with renting the venue, such as a hall, convention centre or shamiana, on the same conditions. Otherwise, catering carries 18 per cent.
Reading the bill
The questions, in order:
- Is the restaurant at specified premises, typically inside a hotel with room values above Rs 7,500? Then 18 per cent. Otherwise 5 per cent.
- For a hotel room, is the value per room per night up to Rs 7,500? Then 5 per cent, from 22 September 2025. Above that, 18 per cent.
- Does the bill show the tax split into central tax and State tax at half the total rate each? It should, for a stay or meal within one State.
A service charge added to a bill is a different question from GST. Where it is charged, it forms part of the value on which GST is calculated: section 15 includes amounts “charged … in respect of the supply”, as the guide on value of supply explains.