Place of supply is one of the highest-risk areas in hotel GST because hotels serve guests from every state, corporate bookers from head offices, and travel management companies that may not be located near the property. The instinct is to use the guest's billing state. For hotel accommodation, that instinct is usually wrong.
Accommodation is tied to immovable property. Under the IGST framework, the place of supply for lodging is generally the location of the hotel property. That decision drives whether the invoice shows CGST/SGST or IGST and whether a corporate recipient can claim ITC cleanly.
The operating rule
For a hotel stay, the service is performed at the property. If your hotel is in Goa, the supply is connected to Goa. If a Delhi company books the room for its employee, the place of supply does not automatically move to Delhi. This is why many corporate hotel invoices show CGST + SGST of the hotel state.
The GST Council and CBIC materials have repeatedly discussed accommodation place-of-supply because it affects tour operators and corporate ITC. Hotels should not improvise this at invoice time.
Example 1: Same-state guest
- Hotel location: Maharashtra
- Guest GSTIN: Maharashtra
- Place of supply: Maharashtra
- Invoice: CGST + SGST
This is simple. The supplier and place of supply are in the same state.
Example 2: Corporate guest from another state
- Hotel location: Karnataka
- Company GSTIN: Delhi
- Place of supply: Karnataka
- Invoice: usually CGST + SGST of Karnataka
The recipient may ask for IGST because their GSTIN is outside Karnataka. But for accommodation, the location of the hotel is the key. Your finance team should explain this clearly and issue invoices consistently.
Example 3: Travel management company booking
A TMC in Haryana books rooms at a Jaipur hotel for a corporate client. The hotel invoice still needs to be built from the property location and the contractual recipient. This is why TMC reconciliation is difficult: OTA/TMC statements, guest folios, and GST invoices often use different legal entities.
For that workflow, read hotel GST reconciliation for OTA, TMC, and direct bookings.
Why this matters for ITC
Corporate customers care because ITC may be easier or harder depending on the place of supply and the recipient registration. A Delhi company receiving Karnataka CGST/SGST may not be able to use that credit the way it expected. The hotel's job is not to redesign tax law at checkout. The hotel's job is to issue the legally correct invoice and keep evidence clean.
Data fields your PMS must capture
- Property GSTIN and state code.
- Legal recipient name.
- Recipient GSTIN and state code, if B2B.
- Booking source and contractual payor.
- Guest name if different from invoice recipient.
- Folio line classification: accommodation, restaurant, banquet, spa, transport.
Hotelary's finance module stores these fields at booking and folio level so the invoice can be generated without manual re-entry.
Common mistakes
- Using the guest's home state as place of supply.
- Switching to IGST only because the corporate GSTIN is from another state.
- Generating one invoice for accommodation and restaurant services without line-level place-of-supply review.
- Letting OTA booking data overwrite the legal invoice recipient.
Further reading
- CBIC Tax Information Portal for Acts, rules, circulars, and notifications.
- GST Portal for GSTIN validation and return filing.
- For credit treatment, see ITC on hotel accommodation.
Disclaimer: Place-of-supply analysis can change for complex contracts, SEZ cases, and bundled services. Confirm with your CA before issuing B2B invoices.
