India's hospitality sector has complex GST — restaurants pay 5% with no ITC while hotels face 12%/18% based on tariff. Food delivery through Zomato and Swiggy adds TCS compliance. Banquet halls must split room rental from food service. Expert CA guidance is essential for profitable compliance in hospitality. TaxAMC's CA team provides expert, industry-specific tax and compliance services for Hotels, Restaurants & Hospitality across India — GST registration and return filing, ITR, MSME registration, TDS compliance, and audit. 100% online, no office visit needed.
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1. Industry Overview — Hotels, Restaurants & Hospitality in India
Hotels, Restaurants & Hospitality businesses operate across India with major clusters in Delhi, Mumbai, Bengaluru, Hyderabad, Goa. The industry involves: Standalone Restaurants, Hotels, Banquet Halls, Catering Services, Cloud Kitchens. Each sub-segment has specific GST, income tax, and compliance requirements that differ from general businesses.
This guide covers the most important tax and compliance issues specific to Hotels, Restaurants & Hospitality in India — helping business owners make informed decisions and avoid common compliance mistakes.
2. GST Rates & HSN Codes for Hotels, Restaurants & Hospitality
GST Rate: 5% on restaurant services (no ITC); 12% on hotel accommodation up to ₹7,500; 18% on hotel above ₹7,500
Applicable HSN Codes:
| HSN Code | Description |
|---|---|
| 9963 | Hotels, Restaurants & Hospitality — 9963 category products |
Using the correct HSN code is critical — wrong HSN classification means wrong GST rate, which leads to demand notices with interest and penalty. TaxAMC ensures all your invoices carry the correct HSN code from day one.
Not sure about the correct HSN code or GST rate for your Hotels & Restaurants products? Our CA team provides a free classification review.
Get HSN Classification Help →3. Industry-Specific GST Issues for Hotels, Restaurants & Hospitality
Hotels, Restaurants & Hospitality businesses regularly face these specific GST compliance challenges:
- ITC blocked on restaurant GST — 5% with no ITC
- Hotel tariff determination for 12% vs 18% rate
- GST on packaged food from restaurant vs canteen
- Zomato/Swiggy TCS compliance
- Composition scheme for restaurants below ₹1.5 crore
Each of these issues requires careful handling. Wrong classification, missed ITC, or delayed returns can result in significant financial exposure. TaxAMC's CA team is experienced in handling these industry-specific challenges for Hotels, Restaurants & Hospitality businesses across India.
4. ITR Filing for Hotels & Restaurants Business Owners
Hotels, Restaurants & Hospitality business owners must file ITR annually. The form depends on business structure:
| Structure | ITR Form | Deadline FY 2025-26 |
|---|---|---|
| Proprietorship (presumptive, turnover < ₹2 crore) | ITR-4 | 31st July 2026 |
| Proprietorship (regular books) | ITR-3 | 31st July or 31st October 2026 |
| Partnership Firm | ITR-5 | 31st October 2026 |
| Private Limited Company | ITR-6 | 31st October 2026 |
Tax Audit: Mandatory if turnover exceeds ₹1 crore (₹10 crore for fully digital transactions) or if declaring income below 8% of turnover under presumptive taxation. TaxAMC handles complete tax audit and ITR for Hotels, Restaurants & Hospitality businesses.
Advance Tax: Hotels, Restaurants & Hospitality business owners must pay advance tax in four instalments — 15th June, 15th September, 15th December, and 15th March. Missing instalments attracts 1% monthly interest under Sections 234B and 234C.
5. Tax Deductions Hotels, Restaurants & Hospitality Businesses Can Claim
Maximising legitimate deductions significantly reduces taxable income. Key deductions for Hotels, Restaurants & Hospitality businesses:
- Food and beverage raw material costs
- Staff salaries and PF/ESI
- Kitchen equipment depreciation
- Rent for restaurant premises
- Zomato/Swiggy commission charges
Additionally, all Hotels, Restaurants & Hospitality businesses can claim: Standard Deduction under Section 16 (for proprietors drawing salary), Section 80C up to ₹1.5 lakh (for individual proprietors), health insurance under 80D, and NPS contribution under 80CCD(1B). TaxAMC ensures all eligible deductions are claimed in your ITR.
Missing out on legitimate deductions? Our CA team reviews your Hotels & Restaurants business accounts and identifies every deduction you're entitled to.
Maximise My Deductions →6. MSME Registration Benefits for Hotels, Restaurants & Hospitality Businesses
Most Hotels, Restaurants & Hospitality businesses qualify as Micro, Small, or Medium Enterprises. Udyam Registration unlocks significant benefits:
| Category | Investment Limit | Turnover Limit |
|---|---|---|
| Micro Enterprise | Up to ₹1 crore in plant & machinery | Up to ₹5 crore |
| Small Enterprise | Up to ₹10 crore | Up to ₹50 crore |
| Medium Enterprise | Up to ₹50 crore | Up to ₹250 crore |
Key benefits: Collateral-free loans up to ₹2 crore, 45-day payment protection from large buyers, government tender preference, electricity and stamp duty concessions in most states, ISO certification reimbursement, and Credit Guarantee Scheme coverage.
7. TDS Compliance for Hotels, Restaurants & Hospitality Businesses
Hotels, Restaurants & Hospitality businesses making payments to contractors, workers, or professionals must deduct TDS:
| Payment | Section | Rate | Threshold |
|---|---|---|---|
| Contractors & sub-contractors | 194C | 1% / 2% | ₹30,000 per payment or ₹1 lakh/year |
| Professional fees | 194J | 10% | ₹30,000/year |
| Rent for premises | 194I | 10% | ₹2.4 lakh/year |
| Goods purchases (large) | 194Q | 0.1% | Purchases above ₹50 lakh/year from single supplier |
TDS must be deposited by 7th of the following month. Quarterly TDS returns (26Q) must be filed on time. Non-deduction attracts 1% per month interest and disallowance of the expense in ITR.
8. Frequently Asked Questions — Hotels, Restaurants & Hospitality Tax & CA Services
Expert CA Services for Hotels, Restaurants & Hospitality — Across India
GST registration & returns, ITR filing, MSME registration, TDS compliance, industry-specific deductions, audit — our CA team handles complete tax compliance for Hotels, Restaurants & Hospitality across India. Major hubs served: Delhi, Mumbai, Bengaluru, Hyderabad, Goa. 100% online, no office visit needed.
Get CA Help for Hotels, Restaurants & Hospitality →Disclaimer: This article is for general informational purposes only and represents our professional views as Chartered Accountants. It does not constitute legal or tax advice. Tax laws are subject to change. Please consult our team for situation-specific guidance.