GST on Hospitality, Banquet, and Catering Services: A Comprehensive Guide for 2026

The hospitality sector is one of the most technically sensitive areas under the Goods and Services Tax regime. Unlike goods, hospitality services involve layered supplies, location-based taxation, bundled contracts, and conditional Input Tax Credit eligibility. As a result, even businesses with strong accounting systems frequently face disputes due to incorrect classification or rate application.

This guide explains GST on hospitality services and GST on catering services in a strictly statutory and compliance-focused manner. It covers hotel accommodation, banquet halls, marriage halls, catering services, and event-related supplies as applicable in India for 2026, without relying on assumptions or commercial interpretations.

Statutory Framework Governing Hospitality GST

GST on hospitality and allied services is governed by the Central Goods and Services Tax Act, 2017, read with rate notifications issued under Section 9 and explanatory notes to the Scheme of Classification of Services. Policy decisions are taken by the GST Council and implemented by the Central Board of Indirect Taxes and Customs under the Central Goods and Services Tax Act.

Hospitality is not treated as a single taxable category. Each service supplied by a hotel or event-related business is examined independently based on its essential character, contractual terms, and actual execution.

Classification of Hospitality, Banquet, and Catering Services

Correct classification is the foundation of GST compliance in the hospitality sector. Services commonly fall under three major headings. Accommodation and food services are classified under Heading 9963. Renting of immovable property, including banquet halls and marriage halls, falls under Heading 9972. Event management and event support services are classified under Heading 9985, specifically SAC 998596.

Classification directly determines the applicable GST rate, eligibility for Input Tax Credit, and place of supply. Incorrect classification is one of the most common reasons for GST demand notices in this sector.

GST on Hotel Accommodation Services

Hotel accommodation services are taxed based on the declared tariff per unit per day. Declared tariff refers to the published or displayed tariff before discounts and includes charges for amenities ordinarily provided with the room. The actual amount charged after discounts does not determine the GST rate.

As applicable in 2026, hotel rooms with a declared tariff up to ₹1,000 per day are exempt from GST. Rooms with a declared tariff between ₹1,001 and ₹7,499 attract GST at 12 percent, while rooms with a declared tariff of ₹7,500 or more attract GST at 18 percent.

GST authorities consistently rely on the declared tariff while assessing compliance. Discounts offered through corporate agreements or online booking platforms do not change the GST slab if the declared tariff exceeds the threshold. Hotels charging GST at 12 percent or 18 percent are eligible to claim Input Tax Credit, subject to standard conditions and blocked credit provisions.

GST on Banquet Hall Services

Banquet hall services are treated as the renting of immovable property for temporary use under GST. This classification applies regardless of the purpose for which the hall is used and irrespective of the profile of the customer.

The GST rate on banquet hall services is 18 percent. Input Tax Credit is available, subject to the general conditions laid down under the CGST Act. Charges for air conditioning, power backup, lighting, seating, stage setup, or other basic infrastructure are considered part of the same supply when bundled with hall rental.

There is no concessional GST rate for banquet halls based on personal, social, or non-commercial use. The nature of the event does not influence the tax rate.

GST on Marriage Hall Services

Marriage halls do not enjoy any special exemption or concessional rate under GST. The marriage hall GST rate is 18 percent, identical to the rate applicable to banquet halls.

This treatment applies equally to standalone marriage halls and banquet halls located within hotel premises. Any facilities provided along with the hall are included in the taxable value if supplied as part of a single arrangement. This position has been consistently followed by tax authorities and reflected in audit practices.

GST on Catering Services

GST on catering services is one of the most frequently misunderstood areas within the hospitality tax framework. This confusion primarily arises due to the incorrect assumption that catering services are treated the same as restaurant services under GST. In reality, catering services are governed by a distinct classification logic, rate structure, and Input Tax Credit treatment.

Under the GST law, catering services are classified based on the place of service execution and the manner in which food is supplied, rather than the nature of food itself. Catering is treated as a service where food preparation, delivery, and serving are combined with manpower and logistical support. As a result, catering services are generally taxed at higher rates than restaurant services.

GST on Outdoor Catering Services

Outdoor catering refers to catering services provided at a location other than the caterer’s registered place of business. This includes catering at banquet halls, offices, institutions, exhibition centres, and event venues.

The outdoor catering GST rate is 18 percent. Input Tax Credit is available on eligible goods and services used in providing the catering service. Outdoor catering is treated as a service-intensive supply involving logistics, manpower, and coordination, which justifies taxation at the standard rate.

GST on Restaurant Services

Restaurant services are specifically notified under GST and attract a concessional rate of 5 percent. Input Tax Credit is not available for restaurant services taxed at this rate.

This concessional rate applies only when food is supplied from restaurant premises. It does not apply to outdoor catering, banquet catering, or event-based food supply. The denial of ITC under the 5 percent regime is absolute and frequently scrutinised during departmental audits.

| Also, read the relatable article on GST on Restaurant Bill

Banquet Hall with Catering and Composite Supply Treatment

When banquet hall rental and catering services are provided together under a single contract, the transaction must be examined under the composite supply provisions of the CGST Act. A composite supply exists where two or more taxable supplies are naturally bundled and supplied together, with one being the principal supply.

In banquet arrangements, the dominant element is the provision of venue and event hosting facilities rather than the supply of food. As a result, the entire consideration is taxed at 18 percent GST, and Input Tax Credit is available.

Artificial segregation of invoices to apply a lower GST rate to food without commercial substance is not supported under GST law and is frequently challenged during audits.

GST on Event Management Services

Event management services include planning, coordination, execution, supervision, and vendor management for events. These services fall under SAC 998596.

The event management GST rate is 18 percent, with eligibility to claim Input Tax Credit subject to standard conditions. When event management services are bundled with banquet hall rental or catering services, the principal supply test applies. In most practical scenarios, the applicable GST rate remains 18 percent on the entire value.

Input Tax Credit in Hospitality and Catering Businesses

Input Tax Credit eligibility in the hospitality sector depends on the GST rate applied to outward supplies. ITC is generally available for hotel accommodation taxed at 12 percent or 18 percent, banquet hall services, outdoor catering services, and event management services.

ITC is not available for restaurant services taxed at 5 percent or for blocked credits specified under Section 17(5) of the CGST Act, including personal consumption. Improper ITC claims are one of the most common triggers for GST scrutiny in hospitality audits.

Service-wise accounting segregation is essential to ensure accurate ITC claims and to avoid reversals and interest liabilities.

Place of Supply Rules for Hospitality Services

For services linked to immovable property, the place of supply is the location of the property or venue. This rule applies to hotel accommodation, banquet hall services, marriage hall services, and event-related services tied to a specific location.

Incorrect place of supply determination frequently results in the wrong payment of CGST and SGST instead of IGST, or vice versa. Such errors are routinely flagged during GST audits and assessments.

Documentation and Invoicing Requirements

GST authorities place significant reliance on contracts, invoices, and the actual conduct of business. Invoices must clearly describe the nature of the service, applicable SAC, GST rate, and place of supply.

Ambiguous descriptions or generic service labels increase litigation risk. Contracts should align with invoicing practices to ensure consistency during audits.

Common Compliance Risks in Hospitality GST

Most GST disputes in the hospitality sector arise from misclassification rather than tax evasion. Applying restaurant GST rates to event catering, claiming ITC where restricted, incorrect composite supply treatment, and errors in place of supply determination are among the most frequently observed issues.

These risks can be mitigated through proper classification, disciplined invoicing, and periodic compliance reviews.

Conclusion

GST on hospitality, banquet, and catering services is governed by clear statutory provisions, but compliance requires precision and discipline. Businesses must move away from commercial assumptions and align their contracts, billing systems, and accounting practices strictly with GST law.

For 2026, hospitality businesses that integrate GST compliance into operational decision-making rather than treating it as a post-billing adjustment will be best positioned to reduce litigation risk and optimize tax efficiency.

FAQs

1. Is GST on hotel accommodation calculated on the discounted price?
   No. GST is calculated on the declared tariff per room per day, not on the discounted or actual amount charged.
2. Are hotel rooms with tariffs up to ₹1,000 exempt from GST?
   Yes. Hotel accommodation with a declared tariff up to ₹1,000 per day is fully exempt from GST.
3. What is the GST rate on hotel rooms above ₹1,000?
   12 percent GST applies for declared tariff from ₹1,001 to ₹7,499.
   18 percent GST applies for declared tariff of ₹7,500 and above.
4. What is the GST rate on banquet hall services?
   Banquet hall services attract 18 percent GST with Input Tax Credit eligibility.
5. Is there any GST exemption for marriage halls?
   No. Marriage halls are taxed at 18 percent GST, the same as banquet halls.
6. What is the GST rate on outdoor catering services?
   Outdoor catering services are taxed at 18 percent GST with Input Tax Credit eligibility.
7. What is the GST rate on restaurant services?
   Restaurant services attract 5 percent GST. Input Tax Credit is not available.
8. How is GST applied when a banquet hall and catering are provided together?
   The supply is treated as a composite supply and taxed at 18 percent GST on the total value.
9. What is the GST rate on event management services?
   Event management services attract 18 percent GST with Input Tax Credit eligibility
10. What determines the place of supply for hospitality services?
    For services related to immovable property, the place of supply is the location of the property or venue.