GST on F&B vs. room tariff: why hotels get this wrong

A guest checks out after a two-night stay with room service and a couple of restaurant meals on their folio. One invoice, one guest, one hotel - and two genuinely different sets of GST rules sitting inside it, because room tariff and food & beverage are not taxed the same way. Treating the whole bill as one tax category is one of the more common, and more avoidable, mistakes we see.

Why they're not the same thing

Room tariff and restaurant sales fall under separate parts of India's GST framework, with their own applicable rates and, in the case of F&B, rules that can depend on facts about the property itself (such as declared room tariffs) rather than being a single flat percentage across every hotel. That means a rate that's correct for the room charge on a folio can be entirely wrong if it's applied to the restaurant charge sitting right next to it on the same bill - or the other way around.

We're deliberately not quoting the specific current percentages here. GST slabs and the rules that determine which one applies have changed more than once, and stating a number with confidence in a blog post that outlives the rule it describes would do more harm than leaving it out. The one fact worth being confident about is the structural one: they're governed separately, and your software needs to treat them separately too.

Where this actually goes wrong in practice

The failure mode is rarely a hotel getting the rate wrong on purpose - it's a single tax rate configured once, early on, and applied everywhere because the software (or the person who set it up) never made room tariff and F&B two distinct things to configure. A restaurant bill settled to a room folio inherits whatever rate the room charges use, silently, because nothing in the system distinguishes the two revenue types at the point tax gets applied.

What separating them actually requires

Room tariff and F&B need to be genuinely independent tax configurations, not one rate with exceptions bolted on. In Hos91, tax rates are set up per revenue type - a room charge and a restaurant charge are taxed according to their own configured rate, computed and applied independently, whether the guest is billed at checkout or the restaurant charge is settled straight to their room mid-stay. Changing one doesn't touch the other, and a GST invoice generated from the folio reflects both correctly without anyone having to remember which line items need a manual adjustment.

As with our e-invoicing post, this is a place where the actual applicable rate for your property is a question for your CA, not a hotel software blog. What's worth checking, whoever you buy from, is whether your system can even represent room tariff and F&B as two separate tax questions in the first place - some can't. Book a walkthrough to see how tax configuration works in Hos91, or start a free trial.