Kodawari Notes: One Rupee Past ₹7,500: The Price Point Indian Hotel Owners Keep Walking Around

A guest books a room at ₹7,500 and pays ₹7,875 with tax. Another guest books the room next door at ₹7,501 and pays ₹8,851. One rupee on the rate, nearly a thousand on the bill. That is not a typo. It is how GST on hotel rooms has worked in India since September 22, 2025.

Under the revised rules, rooms at ₹7,500 a night or less carry 5% GST, and the hotel cannot claim input tax credit. Rooms above ₹7,500 carry 18%, and the hotel can. A year on, Accor's ibis team told CNBC-TV18 that guests have become more aware of the ₹7,500 line when they compare prices, though location and purpose of travel still decide most bookings.

Here is what an owner should do with that.

1. Look at the bill the guest sees, not only the rate you set. A ₹7,400 room and a ₹7,600 room sit on opposite sides of a cliff. The second one costs the guest about ₹1,000 more in tax alone. Your rate card needs to be read the way your guest reads it.

2. Do the credit math before you celebrate the lower rate. At 5% you give up input tax credit on what you buy: inputs, services, and capital goods for those rooms. If you are building or renovating, that GST on the build stays with you. A lower tax for the guest can be a higher cost for the owner.

3. Check where your property actually sits. The test is the declared tariff per room per day, with extra bed charges included. A room that averages ₹7,200 on paper and ₹7,800 with an extra bed is not a ₹7,200 room.

4. Keep rooms and restaurant separate in your head. In a hotel with a restaurant on the premises, food and beverage can still be taxed at 18% even when the room is at 5%. Segregate the supplies properly, because the credit reversal rules apply.

5. Decide the line on purpose. Some owners will price just under it and fill the house. Some will price well above it and keep the credit. The expensive choice is the one made by accident, by a revenue manager chasing a competitor's rate.

Now the caution. I am an operator, not a tax adviser, and the rules have notes and conditions that depend on how your property is structured. Your chartered accountant has to run your own numbers, especially if you are mid-construction. Hotels in the same city can come to different answers for good reasons.

For thirty years I watched owners treat the rate as a marketing number. In India it is now a tax number too. The owners who win the next few years will be the ones who set the rate once, with the accountant and the GM in the same room, and then let the house run.

HPRD

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