GST related Query - Hotel Accomodation

[Preeti Gupta]

In case of hotel accommodation, the applicable tax rate is based on either the tariff rate or the actual charge. Further, after 22-09-2025, since no ITC will be available for room rent per day, please confirm whether ITC-03 needs to be submitted.

[Sadanand Bulbule]

1. Hotel Accommodation – Rate of GST: 

GST rate is determined based on the “declared tariff” (room rent per day) for classification into slabs.

But tax is payable on the actual amount charged, not on the declared tariff.

2. ITC Reversal after 22-09-2025:

As per your note, w.e.f. 22-09-2025, ITC will not be available on hotel accommodation services (room rent per day).

That means any unutilised input tax credit already availed on inputs/services/capital goods related to hotel rooms must be reversed via Rule 42/43 in GSTR-3B.

[Sadanand Bulbule]

56th GST Council recommondation:

Reduction of GST from 12% to 5% on “Hotel Accommodation” services having value less than or equal to Rs. 7,500 per unit per day or equivalent

[Shilpi Jain]

ITC-03 is required to be filed for reversal of credit where the supply becomes wholly exempt (S.18). In the present case the supply is not becoming wholly exempt but rate is reducing to 5% (without ITC option).

However, at the end of FY 25-26 - you would have to do reversal u/r 42 and 43.

AI Summary

Input tax credit reversal for hotel accommodation where ITC is disallowed requires GSTR 3B reversals under Rule 42/43. GST on hotel accommodation is classified by the declared tariff but taxed on the actual amount charged. Where ITC on room rent is disallowed, affected unutilised input tax credit must be reversed through Rule 42 and Rule 43 in GSTR 3B. ITC 03 applies only when a supply becomes wholly exempt; a rate reduction without exemption necessitates reversal under rules 42/43 and year end reconciliation rather than ITC 03 filing.