Online Opt-In Declaration for "Specified Premises" (Hotels) on GST Portal - GSTN Advisory dated 04.01.2026 | Notification No. 05/2025-CTR | Annexure VII / VIII / IX | Timelines | 18% with ITC vs 5% without ITC
Background
The GSTN, vide its latest Advisory dated 04.01.2026, has introduced the online facility for filing the opt-in declaration to classify hotel accommodation premises as "Specified Premises". In the article below, we explain the meaning of "Specified Premises", its practical relevance, the benefits and implications under the GST rate/ITC framework, the process to claim such benefits through the prescribed forms, and key considerations on when to opt in (or not opt in), along with other important compliance points. We begin as under:
GSTN has enabled electronic filing of declarations prescribed under Notification No. 05/2025-Central Tax (Rate) dated 16.01.2025 (amending Notification No. 11/2017-Central Tax (Rate)) for declaring hotel accommodation premises as "specified premises" on the GST Portal. This facility is explained in the GSTN Advisory dated 04.01.2026.
A. Meaning of "Specified Premises" (GST - Hotels)
1) Premises-wise classification (not entity-wise)
"Specified premises" is a premises-wise classification (property/location-wise) introduced in the service rate framework under Notification No. 11/2017-Central Tax (Rate), as amended by Notification No. 05/2025-Central Tax (Rate) dated 16.01.2025.Accordingly, the status attaches to a particular premises, and not to the entity/GSTIN as a whole.
2) When does a premises become "specified premises" for a financial year?
As per Para 4(xxxvi) (substituted by Notification No. 05/2025), a premises becomes "specified premises" for a financial year if any one of the following applies:
Automatic qualification (preceding FY test):
The supplier provided hotel accommodation from that premises in the preceding FY, and the value of supply of any unit of accommodation exceeded ₹7,500 per unit per day (or equivalent).
Opt-in by existing registered person (Annexure VII):
The registered supplier files an opt-in declaration for that premises between 1 January and 31 March of the preceding FY (for the succeeding FY).
Opt-in by a new registration applicant (Annexure VIII):
A person applying for registration files an opt-in declaration within 15 days of acknowledgement/ARN for the registration application.
If you require any clarification on the above provisions or wish to evaluate the most suitable approach to maximise the benefit under this framework, please feel free to contact us at the details provided at the end of this article.
B. How it helps (practical GST benefit)
1) Decides whether restaurant service is taxed at 5% (no ITC) or 18% (with ITC)
The primary commercial reason to classify/declare a hotel premises as "specified premises" is that restaurant service supplied at specified premises falls in the higher-rate-with-ITC bucket, whereas restaurant service at other premises typically remains in the lower-rate-without-ITC bucket.
In practice:
- If the premises is "specified": restaurant service at that premises generally attracts 18% with ITC.
- If the premises is not "specified": restaurant service generally attracts 5% without ITC.
2) ITC becomes usable (cash-flow and cost advantage)
Where a premises is "specified" and restaurant service shifts to the 18% with ITC category, the supplier can typically avail and utilise input tax credit on eligible inward supplies (subject to normal ITC restrictions and blocked credit rules). This is beneficial where inputs are significant, such as:
- F&B supplies and consumables,
- housekeeping, maintenance, manpower, security services,
- capital refurbishments (subject to blocked credit rules),
- common input services attributable to restaurant operations.
3) Premises-wise planning and certainty
The definition is explicitly financial-year based and premises-specific, giving a clean rule for classification each year (either by the ₹7,500 test or by declaration).Further, once you opt-in, the declaration continues for future years unless you opt-out (Annexure IX).
C. Simple illustration
Example A (automatic "specified")
Hotel Premises X had even one room-night billed above ₹7,500 per day in FY 2025-26. Then Premises X becomes specified premises for FY 2026-27 automatically.
Example B (opt-in even if no ₹7,500 booking)
Hotel Premises Y never exceeded ₹7,500 in FY 2025-26, but the hotel wants restaurant service to be in the 18% with ITC category for FY 2026-27. It can opt-in by filing Annexure VII between 01.01.2026 and 31.03.2026.
D. What the GSTN Advisory is implementing (legal base)
1) Underlying notification
The advisory operationalises the declaration mechanism introduced via Notification No. 05/2025-Central Tax (Rate) dated 16.01.2025, which amends the principal rate notification 11/2017-Central Tax (Rate).
2) Why "Specified Premises" matters (rate consequence)
The concept is relevant primarily for classification/rate of "restaurant service" in hotels (and allied hospitality supplies) under Notification 11/2017-CTR (as amended). The commonly applied outcome in the post-01.04.2025 framework is:
- Restaurant service at specified premises: 18% with ITC (Entry 7(vi) of Notification 11/2017-CTR).
- Restaurant service other than at specified premises: 5% without ITC (Entry 7(ii) of Notification 11/2017-CTR).
E. Annexures VII / VIII / IX - what each one does
1) Annexure VII - Opt-in for existing registered persons
- Used by an already registered supplier of hotel accommodation service to declare a premises as "specified premises" for a succeeding FY.
- Filing window: 01 Jan to 31 Mar of the preceding FY.
- Declaration continues in subsequent FYs unless opt-out is filed.
2) Annexure VIII - Opt-in for persons applying for registration
- Used by a person applying for GST registration to declare premises as "specified premises" from the effective date of registration till FY end.
- Continues for subsequent FYs unless opt-out is filed in Annexure IX.
- To be filed separately for each premises.
3) Annexure IX - Opt-out declaration
- Used to declare that a premises shall not be "specified premises" for a particular FY.
- Filing window: on or after 1 Jan but not later than 31 Mar of the preceding FY (for the FY to which opt-out applies).
- To be filed separately for each premises.
F. GSTN Advisory dated 04.01.2026 - operational requirements (portal process)
1) Who can file on the portal
Allowed:
- Regular taxpayers (active and suspended) supplying hotel accommodation and wishing to declare premises as specified.
- New registration applicants (ARN generated) who want specified premises declaration.
Not allowed:
- Composition taxpayers, TDS/TCS registrants, SEZ units/developers, casual taxpayers, cancelled registrations.
2) Timelines (portal filing windows)
- Existing registered persons (Annexure VII): 01 Jan-31 Mar of preceding FY (for FY 2026-27: 01.01.2026-31.03.2026).
- New applicants (Annexure VIII): within 15 days from ARN generation, even if GSTIN not yet allotted, provided the application is not rejected.
- After 15 days: opt-in can be filed only when Annexure VII window opens.
- If registration application is rejected: Annexure VIII cannot be filed.
3) How to file on GST Portal
- Log in to GST Portal
- Navigate to: Services → Registration → Declaration for Specified Premises
- Select the relevant option (Opt-in Declaration / Download Annexure Filed)
- Select eligible premises, fill the declaration, and submit using EVC
- On successful submission, an ARN is generated.
4) Limits and outputs
- Maximum 10 premises can be selected in one declaration.
- Additional declarations may be filed for remaining premises.
- Separate PDFs are generated with premise-wise reference numbers.
5) Downloading and confirmation
- Filed Annexures can be downloaded from the same menu.
- Email and SMS confirmation is sent to authorised signatories upon successful filing.
6) Re-filing requirement for FY 2026-27 (manual to online transition)
For FY 2025-26, declarations were filed manually with jurisdictional authorities. Now, taxpayers are required to file Annexure VII electronically for FY 2026-27 during 01.01.2026-31.03.2026.
G. Statutory provisions cited in Notification 05/2025 - relevance (preamble references)
Notification No. 05/2025 cites powers under Sections 9(1), 9(3), 9(4), 11(1), 15(5) and 148 of the CGST Act. In brief:
- Section 9(1): power for levy and notifying CGST rates for intra-State supplies.
- Sections 9(3) & 9(4): reverse charge enabling references (often cross-cited in rate notifications).
- Section 11(1): exemption notification power (often cited alongside rate powers).
- Section 15(5): valuation enabling reference; the definition uses "value of supply > ₹7,500 per day" as a trigger.
- Section 148: power to notify special procedure for certain classes of registered persons.
H. Pros and Cons of declaring a hotel premises as "specified premises" (or falling under it automatically)
Pros
1) Enables 18% with ITC on "restaurant service" at that premisesWhere restaurant services are supplied at "specified premises", the commonly applied entry results in 18% with ITC, whereas restaurant services outside specified premises are generally 5% without ITC.Practical benefit: eligible ITC can be used to offset output tax, reducing net tax cost where inputs are significant.
2) Better for input-heavy operations (capex/opex credit utilisation)Hotels typically have sizeable GST-bearing inward supplies (F&B, manpower, AMC, housekeeping, security, repairs, etc.). Under the "with ITC" route, eligible ITC can be utilised instead of becoming a cost (subject to general ITC restrictions).
3) Premises-wise flexibility and planning (financial-year based)"Specified premises" is defined for a financial year and can be achieved either by the preceding FY threshold or by opt-in declarations (registered person: Jan-Mar window; new applicant: within 15 days of ARN acknowledgement).This allows structured premises-wise planning rather than a one-size-fits-all entity-level decision.
4) Continuity once opted-in (until you opt out)Once the premises is declared specified, the declaration continues for subsequent financial years unless an opt-out (Annexure IX) is filed.This reduces repeated annual compliance where business intent remains unchanged.
Cons
1) Higher headline GST rate (pricing and demand sensitivity)Moving restaurant service at that premises to the "specified premises" bucket generally means moving to 18% (instead of 5%).If your customer base is largely B2C (non-ITC eligible), this can affect price perception and demand unless pricing is restructured or part of tax is absorbed.
2) ITC discipline becomes critical (documentation + attribution)The advantage depends on actually being able to claim and utilise ITC. That requires stronger controls on:
- tax invoices and eligibility,
- vendor compliance,
- matching and reconciliations,
- attribution between taxable/exempt/blocked credits (where applicable).If ITC is weak/blocked, 18% can become a pure cost escalation.
3) Additional compliance decisions (premises-wise declarations and tracking)Operationally:
- declarations are premises-wise,
- maximum 10 premises per filing with premise-wise PDFs/reference numbers,
- opt-in continues unless opt-out is filed.For groups with multiple premises/GSTINs, this becomes a control and tracking exercise.
4) Customer-side impact for B2B vs B2C mixIf customers are B2B and ITC-eligible, 18% with ITC is often neutral or acceptable.If customers are B2C, the higher tax rate may be commercially adverse even if ITC benefits you internally.
I. Practical rule of thumb for decision-making
Opt-in/being specified is typically beneficial when:
- eligible ITC is high and can be utilised, and/or
- customer mix is B2B/ITC-eligible, and/or
- pricing can absorb or pass on 18% without demand loss.
If you share two numbers for a premises-(i) monthly restaurant turnover, and (ii) monthly eligible GST inputs for restaurant operations-I can compute a quick break-even comparing "5% without ITC" vs "18% with ITC" for that premises.
Conclusion
The GSTN Advisory dated 04.01.2026 is a significant operational step because it brings the "specified premises" declaration framework-introduced via Notification No. 05/2025-Central Tax (Rate)-onto the GST Portal in a structured and trackable manner. Since "specified premises" is a premises-wise, financial-year based classification, hotels must evaluate each location separately and determine whether it becomes specified automatically (due to the ₹7,500 preceding-FY threshold) or whether an opt-in is commercially preferable through Annexure VII/Annexure VIII.
From a practical standpoint, the decision is not merely procedural; it directly impacts the GST rate and ITC availability for restaurant services at that premises (typically 18% with ITC versus 5% without ITC). Therefore, taxpayers should undertake a premises-wise cost-benefit analysis, strengthen ITC controls if opting for the "with ITC" route, and ensure strict calendar compliance with the prescribed filing windows. Further, taxpayers who filed declarations manually for FY 2025-26 must ensure timely electronic filing for FY 2026-27 within 01.01.2026 to 31.03.2026 to maintain continuity and avoid classification or compliance disputes.
The author can also be reached at varunmukeshgupta96@gmail.com
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