GST on homestays and holiday lets: rates, credit and platforms

The GST on a stay depends on one number, the value of each unit of accommodation per day, and on one status, whether you are liable to register. This page walks through both.

For GST purposes, letting a room or a whole home to a guest for a short stay is a supply of accommodation service. The official texts describe the category as accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes. A homestay or holiday flat sold by the night is generally discussed within this family, but how your own property is classified is a point to confirm with a chartered accountant, particularly if you also let long term.

The two bands in force since 22 September 2025

Notification No. 15/2025-Central Tax (Rate), dated 17 September 2025, took effect on 22 September 2025 and reshaped the accommodation entry:

• Value of a unit of accommodation up to and including ₹7,500 per unit per day: 5%, without input tax credit.
• Value above ₹7,500 per unit per day: 18%, with input tax credit.

The Ministry of Finance FAQs on the 56th GST Council decisions add two useful clarifications: the 5% rate is mandatory for units at or below ₹7,500, and suppliers of such units cannot avail ITC on them. There is no option to stay at 18% with credit for a cheaper room.

What "without ITC" means for an owner

Input tax credit is the mechanism that lets a registered business deduct the GST it paid on its own purchases (furniture, linen, repairs, cleaning services, software) from the GST it collects. In the 5% band that deduction is closed. The GST embedded in your running costs therefore becomes a cost, and your margin should be worked out on that basis. In the 18% band credit is available, subject to the normal conditions of the law, which is one reason premium properties sometimes look different on paper.

How the rate has moved

• From July 2017, stays below ₹1,000 a day were exempt.
• From 18 July 2022, that exemption was withdrawn and accommodation up to ₹7,500 was taxed at 12%.
• From 22 September 2025, the same band moved to 5% without ITC, with 18% above ₹7,500.

If you read an older blog post quoting 12%, it describes the pre-September 2025 position.

When the platform pays instead of you

Section 9(5) of the CGST Act allows the Government to make an e-commerce operator liable for the tax on certain services sold through it. Accommodation was added to that list by Notification No. 23/2017-Central Tax (Rate) of 22 August 2017, amending Notification No. 17/2017. The entry carries an important exception: it does not apply where the person supplying the stay through the operator is liable for registration under section 22(1).

• Host below the registration threshold, booking through a platform: the platform is treated as the supplier for GST and pays it.
• Host liable to register: the host charges and pays GST on his stays, including those sold through platforms.
• Host below the threshold, taking only direct bookings: no platform is involved, and the registration threshold is the first question.

Reading the threshold correctly

The ₹7,500 test is applied per unit of accommodation per day, on the value of supply. A three-bedroom villa let as a single unit and a guest house letting three separate rooms are therefore not the same calculation. And because the rate applies to the full value, a room priced at ₹7,600 attracts 18% on the whole ₹7,600. Discounts, long-stay rates and extra-guest charges can all change the value; a chartered accountant should look at how your prices are built before you rely on one band or the other.

Questions to take to your accountant

• Is each property one unit, or are rooms separate units?
• Am I liable to register once all activities under my PAN are counted?
• Which of my platforms already pay GST on my behalf under section 9(5)?
• What happens to credit on set-up costs if my rates straddle ₹7,500?