The West Bengal Authority for Advance Ruling (AAR) has clarified that hotel accommodation bundled with meal plans will attract 18% GST if the combined value of services exceeds Rs 7,500 per room per day, regardless of whether food and lodging charges are shown separately in invoices.
The ruling was issued in response to an application by a hotel offering guests flexibility to choose from European Plan (EP), Continental Plan (CP), and American Plan (AP) meal-inclusive packages along with accommodation.
According to the order, the composite supply of hotel accommodation and meals will be treated as a bundled service, with accommodation as the principal supply.
“The total value of supply in a combined form (room charge and food charge) is to be considered for GST rate determination,” the AAR observed. It further clarified that if the hotel’s charges remain below Rs 7,500 per room per day in a financial year, the property will not qualify as a “specified premise” in the following year, and the lower GST rate will apply.
The GST rate on hotel rooms is 12% for room tariffs up to Rs 7,500 per night and 18% for room tariffs above Rs 7,500 per night.
On restaurant services offered to walk-in guests, the AAR held that the applicable GST rate will be 5% (2.5% CGST + 2.5% SGST) under Notification No. 05/2025, subject to prescribed conditions, so long as the hotel does not qualify as a “specified premise.” However, if in any financial year, tariffs for any unit exceed Rs 7,500 inclusive of meal charges, the premises will be considered “specified” in the next year, and restaurant services will also attract 18% GST.
Amit Maheshwari, tax partner, AKM Global, says: “The West Bengal AAR ruling is significant for the hospitality sector as it reconfirms that accommodation with meals constitutes a composite supply, where the total value of the package, and not individual components, drives the GST rate.”
According to him, while the law on ‘specified premises’ and the Rs 7,500 threshold has been settled, the uniqueness of this ruling lies in its forward-looking application — the AAR has categorically held that even one instance of charging above Rs 7,500 in a financial year would trigger reclassification of the hotel as a ‘specified premise’ for the entire next financial year.
This interpretation is critical because many hotels follow dynamic pricing models, particularly during festive seasons or peak demand. A short-term rate surge, even if applied to a limited number of rooms, may alter GST treatment for the entire business in the following year.
The ruling also clarifies that separate invoicing of room charges and meals does not shield the hotel from this aggregate test, closing any room for interpretational flexibility.
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