ITC IN HOTEL STAY

ITC on hotel accommodation used for business is restricted under Section 17(5)(b)(i) of the CGST Act. This blocks ITC for services of a hotel, inn, guest house, club or campsite or other commercial place meant for residential or lodging purposes. The restriction applies regardless of whether the stay is for a business trip.

There is one exception: if the hotel accommodation itself is a goods or services used by a taxable person for making an outward taxable supply of the same category of goods or services. This means a travel agent or hospitality company re-billing hotel accommodation as part of their own taxable supply can claim ITC, but an end-user business cannot.

For employee hotel stays during business travel, the 12% or 18% GST paid to the hotel is a blocked credit. Treat it as part of the accommodation expense in books.

Conference/meeting rooms in hotels are a different item. GST on banquet hall or meeting room hire for business purposes is not blocked under Section 17(5) and ITC can generally be claimed, provided the room hire is for your own business use and not for blocked purposes like employee recreation.

This [GST compliance guide for India 2026-27](https://taxgarden.in/blog/gst-compliance-guide-india-2026-27) has the Section 17(5) blocked credits list with practical examples.

Correction to a reply above: hotel accommodation is NOT in the Sec 17(5) blocked list (that covers food & beverages, beauty, health services, motor vehicles etc.); place of supply is the hotel's location (Sec 12(3) IGST Act), so CGST+SGST charged on your Rajasthan GSTIN is validly claimable there — keep the travel/business-purpose evidence and contest the department's view.

ITC is not automatically ineligible merely because the employee belongs to the Mumbai HO. The key issue is whether the Rajasthan hotel supply is attributable to a Rajasthan GST registration that is entitled to claim it. If your business has a separately registered Rajasthan GSTIN, the hotel invoice is issued to that GSTIN with its correct details, the stay is for business, and the ITC conditions under section 16 are met, the employee’s Mumbai posting alone should not disqualify the credit.

If the Rajasthan GSTIN is not the recipient on the invoice, or the hotel stay relates to the Mumbai registration rather than Rajasthan operations, the department may dispute the claim. Check the invoice, the employee’s business purpose and expense records, and which registration received the hotel service; those facts determine the stronger position.

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