GST on hotel rooms and restaurant bills in India: rates, invoices and SAC codes

The rates at a glance

How the ₹7,500 line works

• It is per unit, per day. A family taking two rooms at ₹5,000 each pays 5% on both, even though the booking comes to ₹10,000 a night.
• It is the value actually charged, not a published tariff. The value of a supply is the transaction value — the price actually paid or payable — and a discount given at the time of supply and shown on the invoice is not part of it (section 15 of the CGST Act). A room listed at ₹9,000 but invoiced at ₹7,200 a night is on the 5% side.
• There is no choice below the line. The Finance Ministry’s FAQ says the 5% rate is mandatory for units of ₹7,500 or less: a hotel cannot charge 18% on them to claim input tax credit.
• Cheap rooms are taxed too. The exemption for rooms of ₹1,000 or less a day ended on 18 July 2022; since 22 September 2025 they are in the 5% band.
• Credit is split. A hotel with rooms on both sides of the line cannot take credit on inputs used only for the 5% rooms, and reverses the proportionate share of common credit as if the 5% rooms were exempt (section 17(2) of the CGST Act, as the FAQ explains).

Restaurant bills

“Restaurant service” is the supply of food or drink by a restaurant or eating joint — a mess and a canteen included — whether it is eaten on the premises or away from them. So takeaway and home delivery are restaurant service, and CBIC has clarified that cloud kitchens and central kitchens are too.

• Restaurants not in specified premises: 5% without input tax credit. The rate comes with the condition that credit on the goods and services used to supply the service is not taken.
• Specified premises: 18% with credit. From 1 April 2025, premises are “specified” for a financial year if the hotel supplied any unit of accommodation at more than ₹7,500 per unit per day in the previous financial year — or if the hotel chose to declare them specified premises, by a declaration filed on or before the start of the financial year, or on registration.
• A stand-alone restaurant cannot opt in. The notification of 17 September 2025 explains that “premises” here means a place from where hotel accommodation is supplied.
• Outdoor catering is 5% without credit, unless it is supplied by a hotel that is itself specified premises or by a caterer located in specified premises.
• Room service in a hotel is restaurant service; its rate follows the premises.
• Liquor is outside GST. The Constitution was amended to keep alcoholic liquor for human consumption out of GST, so the liquor on a bar bill is taxed under your state’s own laws while the food on the same bill carries GST.

The composition scheme

A small restaurant can opt to pay GST as a flat 5% of its turnover (2.5% CGST and 2.5% SGST) if its aggregate turnover in the previous financial year was not more than ₹1.5 crore (₹75 lakh in eight states). It then cannot collect tax from its customers and issues a bill of supply, not a tax invoice. Whether a composition restaurant may sell through the delivery apps has not been officially settled — ask your accountant before you opt in if you do.

Swiggy, Zomato and booking sites

Since 1 January 2022, when food is ordered through an e-commerce operator such as Swiggy or Zomato, the platform pays the GST on it under section 9(5) of the CGST Act, issues the invoice to the customer, and no longer collects TCS from the restaurant on those orders. The restaurant does not charge GST on them but still reports them in its returns. A restaurant in specified premises is outside this rule and pays the GST on its app orders itself. Our Swiggy and Zomato guide works through what such an order leaves the restaurant.

Rooms booked through a booking site work the other way round. The site pays the GST under section 9(5) only where the hotel is not liable to register for GST — broadly, a hotel below the ₹20 lakh turnover threshold. A hotel that is liable to register charges GST on those bookings itself.

CGST and SGST, or IGST?

For a hotel stay the place of supply is where the hotel is (section 12(3)(b) of the IGST Act), so the supply is within your state and the invoice shows CGST and SGST — even when the guest, or the guest’s company, is from another state (section 8(2)). A restaurant meal is the same: its place of supply is where it is served (section 12(4)).

What the invoice must show

Rule 46 of the CGST Rules lists what a tax invoice must carry. For a hotel or a restaurant the ones that matter are:

• Your name, address and GSTIN.
• A serial number of up to 16 characters, in one or more series, unique for the financial year.
• The date.
• The customer’s name, address and GSTIN when the customer is registered — the company a business traveller works for, for example.
• The SAC code, and a description of the service.
• The total value, and the taxable value after any discount.
• The rate and amount of tax, split into CGST and SGST (or IGST).
• The place of supply, for a supply across state lines; whether tax is payable on reverse charge; your signature; and the QR code with the IRN when the invoice is an e-invoice.

For a sale of less than ₹200 to a customer who is not registered and does not ask for an invoice, a registered business need not issue an individual tax invoice; it issues one consolidated invoice for all such sales at the close of the day (section 31(3)(b) with rule 46).

SAC digits, and e-invoicing

• With a turnover up to ₹5 crore, the SAC goes on invoices to registered customers to 4 digits (9963), and may be left off invoices to unregistered customers. Above ₹5 crore it is 6 digits (996311, 996331…) on every invoice.
• If your aggregate turnover in any financial year from 2017–18 onwards has crossed ₹5 crore, invoices to registered customers must be e-invoices with an IRN from the invoice registration portal. Hotels and restaurants are not among the exempt businesses. GSTN’s advisory adds that, from 1 April 2025, businesses with an aggregate turnover of ₹10 crore or more cannot report an e-invoice more than 30 days old.

Worked examples

The two dinners are the same food at the same price. The difference is only where they were served — which is why a hotel restaurant should check every April whether it is in specified premises for the year.

Common mistakes

• Still charging 12% on rooms after 22 September 2025.
• Charging 18% on a room of ₹7,500 or less to claim input tax credit — the 5% rate is mandatory.
• Deciding the rate from the published tariff instead of the price on the invoice.
• Charging IGST to a guest from another state for a stay or a meal.
• A stand-alone restaurant charging 18%.
• Charging GST yourself on food ordered through Swiggy or Zomato, when the platform pays it.
• Adding GST to the liquor on a bar bill.
• Restarting or skipping invoice numbers within a financial year.