GST Rate Cut to 5% for Budget Hotels Under ₹7,500 Restricts Input Tax Credit

• The 56th GST Council reduced the GST rate for hotel accommodations valued up to 7500 rupees per unit per day from 12% to 5%, effective September 22, 2025
• Hotels providing accommodation under this new 5% rate cannot claim Input Tax Credit on their business expenses like laundry, food supplies, and maintenance costs
• Existing ITC in electronic credit ledgers can be used for output tax liabilities until September 21, 2025, after which accumulated ITC must be reversed for supplies under the new rate structure
• Hotels must reassess their pricing strategies since the inability to claim ITC may increase overall service costs despite the lower GST rate making accommodations more affordable for customers

Source: mastersindia.co

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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