Renting your home short-term in India: how GST and income tax work

Two separate taxes can apply to the money your guests pay: GST on the stay and income tax on what you earn. Here is how each one works, explained plainly and checked against official texts.

If you let a flat, a villa or a few rooms to guests for a few nights at a time, whether through Airbnb, Booking or your own contacts, the money that comes in can be touched by two different taxes. Goods and Services Tax (GST) looks at the stay itself as a supply of a service. Income tax looks at what is left for you as the owner. They are run by different authorities, triggered by different thresholds and filed on different returns. Mixing them up is the most common source of confusion we see among owners, including NRIs managing a property from abroad.

This site explains the mechanics. It does not tell you what to do in your own situation: that is the job of a chartered accountant who can see your figures, your ownership structure and the way you actually run the property.

Two taxes, two different questions

• GST asks: is the stay taxable, who must collect the tax, and at what rate?
• Income tax asks: under which head of income do the rents fall, and what may be deducted before tax is calculated?

An owner can have nothing to do on the GST side and still have to declare the rental income, or the other way round.

GST: the rate follows the nightly value of each unit

Since 22 September 2025, after the 56th GST Council meeting and Notification No. 15/2025-Central Tax (Rate), accommodation is taxed in two bands according to the value of supply of a unit of accommodation per day:

• ₹7,500 or less per unit per day: 5% without input tax credit (ITC). The Finance Ministry FAQs describe this as a mandatory rate: the supplier cannot choose 18% with credit for such units.
• Above ₹7,500 per unit per day: 18% with ITC.

Worked example: ₹6,000 versus ₹9,000 a night

Take a host who is required to charge GST, and a guest staying three nights. The figures below only apply the two verified rates; they ignore any other charge.

• Apartment at ₹6,000 a night. The value per unit per day is below ₹7,500, so the 5% band applies. Three nights come to ₹18,000; GST is ₹900 (₹300 a night); the guest pays ₹18,900. Because this band carries no ITC, the GST the host paid on purchases for that unit cannot be set off.
• Villa at ₹9,000 a night. The value is above ₹7,500, so the 18% band applies. Three nights come to ₹27,000; GST is ₹4,860 (₹1,620 a night); the guest pays ₹31,860. In this band, input tax credit is available, subject to the usual conditions.

The practical lesson: a nightly price just over ₹7,500 moves the whole stay into the 18% band, not only the part above the threshold. Pricing near that line deserves a calculation before you publish a rate.

Who actually charges GST when you list on a platform

Under section 9(5) of the CGST Act, accommodation booked through an e-commerce operator has been a notified service since 22 August 2017. The platform then pays the GST on the stay, except where the host is himself liable for registration under section 22(1). In short: a small host below the threshold who sells through a platform does not collect GST himself; a host above the threshold does.

The registration threshold

For suppliers of services, the aggregate turnover threshold for registration is ₹20 lakh, and ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura. Aggregate turnover is counted on an all-India basis for the same PAN, so every property and activity under your PAN adds up.

Income tax in a nutshell

Since 1 April 2026, the Income-tax Act, 2025 applies and speaks of a tax year (1 April to 31 March). Rental income is usually taxed as income from house property, where a flat 30% standard deduction is allowed on the net annual value. Some owners who run a service-heavy homestay argue it is business income instead. Since 2025 the law says expressly that letting a residential house by its owner is not business income, but where genuine hospitality services are supplied the analysis depends on the facts. Our income tax guide sets out both readings.

What this site will not do

We do not give tax advice, prepare returns or promise any saving. State tourism registration, local licences and guest reporting are separate subjects covered elsewhere. Before you set prices or decide how to declare, sit down with a chartered accountant.