GST Rate Changes for Hotels and Restaurants: Effective from 01.04.2025

The Ministry of Finance has introduced notable changes to the Goods and Services Tax (GST) framework for the hospitality sector. With the issuance of Notification No. 05/2025-Central Tax (Rate), significant amendments have been implemented, effective from April 1, 2025. Here’s everything you need to know about the updated GST rates for hotel accommodation and restaurant services.

Key Amendments Introduced

Removal of “Declared Tariff” Definition

The revised notification eliminates the concept of “declared tariff” simplifying the GST rate determination process. This change ensures greater transparency and uniformity in applying GST rates.

Revised Definition of “Specified Premises”

The definition of “specified premises” has been updated to link GST rates for restaurant services to the value of hotel accommodation provided in the previous financial year.

New Criteria for Specified Premises:

1. Accommodation Value Above ₹7,500 per Day:
   • GST on restaurant services: 18% with Input Tax Credit (ITC).
   • Without ITC: 5%.
2. Optional 18% GST with ITC:
   • Hotels can opt for this rate by filing a declaration before the financial year begins or at the time of registration.

Declaration Requirements for Specified Premises

Filing Declarations for Existing and New Taxpayers

• Existing Taxpayers: Must file declarations between January 1 and March 31 of the preceding financial year.
• New Taxpayers: Required to submit declarations within 15 days of receiving acknowledgment of their GST registration application.

Annexures for Declarations

To streamline the declaration process, the Ministry has introduced three annexures:

• Annexure VII: For opting in or out of specified premises status.
• Annexure VIII: Declaration format for new registrations.
• Annexure IX: Format for modifications or withdrawals.

Impact on GST Rates for the Hospitality Sector

The revised rules aim to:

1. Streamline Taxation: Clear guidelines on applicable GST rates reduce ambiguity.
2. Promote Compliance: Hotels opting for the 18% GST with ITC must declare their status in advance.
3. Encourage Fair Practices: Removal of the “declared tariff” ensures uniform taxation across the sector.

Timeline for Compliance

The Ministry has set a structured timeline for implementing these changes:

• Declaration Period: January 1 to March 31, annually.
• Submission Deadline for New Taxpayers: Within 15 days of registration acknowledgment.
• Effective Date: April 1, 2025.

Conclusion

The GST amendments introduced under Notification No. 05/2025-Central Tax (Rate) are a step towards simplifying the tax regime for hotels and restaurants. These changes bring clarity and ensure fair tax practices in the hospitality sector.

Stay updated on the latest GST notifications to ensure timely compliance and maximize benefits under the revised framework.