Is GST Applicable for Homestays in Karnataka?

homestay in karnataka

Whether you're a traveler looking to book a peaceful stay or a host planning to list your property, understanding GST (Goods and Services Tax) implications is essential. In this blog, we’ll break down how GST works for homestays, what exemptions exist, and what this means for both guests and owners.

What is GST and Why Does It Matter?

GST is a unified indirect tax system introduced in India to streamline various state and central taxes. It applies to the supply of goods and services, including accommodation services such as hotels, lodges, guest houses, and now increasingly, homestays.

Homestays fall under the hospitality category, which means if your property is offering paid lodging or food services, there's a chance GST might be applicable depending on your revenue and pricing structure.

GST Applicability for Homestays in Karnataka

Now, let’s come to the big question: Are homestay in Karnataka subject to GST?

The Answer: It Depends

GST is applicable based on the annual turnover of the homestay owner and the price per room per night. Here's a breakdown:

1. Annual Turnover Below ₹20 Lakhs (₹10 Lakhs for Special Category States)

If the total revenue from your homestay (including food and other services) is below ₹20 lakhs annually, then you are exempt from GST registration and collection. This is especially applicable for small family-run homestays offering just a few rooms.

2. Room Tariff Below ₹1,000 per Night

As per the current GST rules, accommodation services with room tariff below ₹1,000 per night are fully exempt from GST, regardless of turnover. This means many budget-friendly properties in remote towns and hill stations in Karnataka are automatically GST-free.

3. Room Tariff Above ₹1,000 per Night

If your room tariff exceeds ₹1,000 per night, GST will apply based on slabs:

• ₹1,001 to ₹7,500 per night – 12% GST

• Above ₹7,500 per night – 18% GST

So, if you're running a premium or luxury homestay in Karnataka, and your prices are above these thresholds, you'll need to register for GST and include it in your pricing.

Who Needs to Register for GST?

If you meet either of the following criteria, you are required to register for GST:

• Your annual revenue exceeds ₹20 lakhs, regardless of room pricing

• Your room rates exceed ₹1,000 per night, and you're offering hospitality services regularly

Even if you're listed on platforms like Airbnb, MakeMyTrip, or Booking.com, you need to be aware of these thresholds because tax compliance still rests with the host.

GST for Aggregators and Platforms

Online Travel Agencies (OTAs) like Airbnb or Raahghar (a rising homestay platform that curates stays in offbeat locations) act as intermediaries and sometimes collect GST on behalf of hosts. However, this does not relieve hosts from their own tax responsibilities if their revenue or room rate structure makes them liable.

For example, if you’ve listed your property on Raahghar, and your room tariff is ₹3,000/night, and your turnover exceeds ₹20 lakhs/year, then you must have a GST number and issue proper tax invoices.

Benefits of Registering for GST as a Homestay Owner

While it may seem like an added burden, registering under GST can also bring certain benefits:

• Increased Credibility: Guests often perceive registered properties as more trustworthy.

• Tax Input Credit: You can claim input tax credit on business-related expenses like maintenance, food supplies, electricity, and promotional services.

• Expansion Opportunities: GST registration allows you to list your property on more platforms and work with corporate clients who require tax invoices.

Tips for Homestay Owners in Karnataka

1. Maintain Records: Even if you fall below the threshold, keep a record of bookings and revenue.

2. Factor GST into Your Pricing: Instead of adding it as an extra, consider including GST in your listed price to maintain price transparency.

3. Hire an Accountant or Consultant: A tax professional can help you manage filings and compliance without stress.

4. Monitor Changes in GST Laws: Rules change frequently. Keeping updated will ensure you're always compliant.

Homestay in Karnataka: What Guests Should Know

If you're a traveler looking to book a homestay in Karnataka, here’s how GST might affect you:

• Check if GST is included: Some platforms show base price and tax separately.

• Ask for an invoice: If you need it for business travel or reimbursement, a valid GST invoice is a must.

• Support Local: Many small homestays are exempt from GST, so booking them helps support local families directly.

In particular, boutique platforms like Raahghar focus on local, sustainable travel and often work with hosts who are transparent about taxes and pricing.

GST Exemptions to Keep in Mind

There are a few scenarios where homestay operators may remain exempt from GST:

• If the homestay is operated casually, without a commercial intent.

• If it is not advertised or marketed via paid listings or booking sites.

• If food is served as a part of hospitality but not as a separate, billed service.

However, once you commercialize the property – even partially – it’s advisable to assess your tax obligations carefully.

Final Thoughts

In conclusion, GST is applicable to homestays in Karnataka based on specific criteria such as annual turnover and room tariff. While many small-scale homestays are exempt, mid-to-premium ones need to register and comply with GST laws. This ensures legal transparency and trust between guests and hosts.

For hosts, understanding GST is not just about legal compliance—it’s about running a responsible and professional business. And for guests, knowing how GST works can help you make better booking decisions.

Whether you’re a coffee estate owner in Chikmagalur or a beachside host near Gokarna, staying informed about taxation helps everyone in the ecosystem thrive.

And speaking of stays—Which location in Wayanad is best to stay? Now that’s another experience waiting to unfold!

If you’re planning a memorable escape and looking for a beautiful homestay in Karnataka, platforms like Raahghar make it easier than ever to find charming properties that fit every budget and taste—while being compliant with the law.

Disclaimer: This article is for informational purposes only. For tax advice or compliance, consult a certified GST practitioner or CA.