GST Changes From 1 November 2026: Hotel and Catering ITC, EV Services and Rate Updates
GST changes from 1 Nov 2026: ITC on same-line hotel and catering inputs capped at 2.5%, 2.5% rate on EV passenger transport and rental, and new goods entries.
Key takeaways: gst rate itc changes
- GST rate ITC changes apply from 1 November 2026 (Notification No. 06/2026-Central Tax (Rate)).
- Same-line input credit for hotel accommodation and outdoor catering is capped at 2.5% where the supplier charges above 2.5%.
- Electric vehicle passenger transport and rental, with battery charging included, attract 2.5% central tax.
Table of contents
Following the 57th GST Council meeting (8 October 2026), the Central Tax (Rate) notifications dated 27 October 2026 change the GST treatment of hotels, restaurants, catering and electric-vehicle services, with effect from 1 November 2026. This article is based on Notification No. 06/2026-Central Tax (Rate), which amends Notification No. 11/2017-Central Tax (Rate). The integrated tax notifications make corresponding changes.
1. Input tax credit for hotels, restaurants and catering
Under serial no. 7 of the rate notification, ITC is generally restricted for these services. The amendment allows credit on same-line input services, that is, where you buy the same kind of service from another supplier and then supply it onward:
| Service | ITC allowed on | Cap |
|---|---|---|
| Hotel accommodation | Hotel accommodation procured from another supplier | 2.5% of the value where the supplier charges central tax above 2.5% |
| Restaurant service (other than at specified premises) | Restaurant service procured from another provider | No cap is added by the amendment |
| Food or drink on trains and platforms | Food or drink procured from Indian Railways, IRCTC or their licensees | No cap is added by the amendment |
| Outdoor catering | Outdoor catering procured from another supplier | 2.5% where the supplier charges central tax above 2.5% |
| Outdoor catering with renting of premises (not at specified premises) | The same services procured from another supplier | 2.5% where the supplier charges central tax above 2.5% |
Example: if you buy hotel accommodation worth ₹10,000 from a supplier who charges central tax at 9% (₹900), the credit available is capped at 2.5% of the value, that is ₹250, instead of ₹900.
2. Electric vehicle services
- Transport of passengers by an electrically operated vehicle, where the cost of battery charging is included in the consideration (new item in serial no. 8): 2.5% central tax (5% in total with State tax).
- Renting of an electrically operated vehicle for passengers, and for transport of goods, with battery charging included (new items in serial no. 10): 2.5% central tax.
- ITC on same-line input services for these items is capped at 2.5% where the input supplier charges more than 2.5% (the notification’s illustration: an input service of ₹800 at 9%, tax ₹72, gives credit of ₹20).
- “Electrically operated vehicle” is now defined to mean a road vehicle running solely on electrical energy from an external source or from batteries fitted to it, and it expressly includes e-bicycles.
3. Goods transport agency definition
“Goods transport agency” is redefined to mean any person providing road transport of goods who issues a consignment note, by whatever name called.
4. Delivery services
The rate notifications also amend the entries on delivery services supplied through e-commerce operators (serial no. 12 of Notification 11/2017 and a substituted clause in Notification 17/2017, which governs tax payable by e-commerce operators). Because the wording is technical, read the notification text before applying it to your business.
5. Some goods rate changes (Notification 02/2026-Central Tax (Rate), from 1 November 2026)
- Pre-packaged and labelled animal, vegetable or organic fertilisers, including seaweed-extract-based bio-stimulants registered under Schedule VI of the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985: Schedule I (2.5%).
- Retreaded tractor tyres (HSN 4012): new entry in Schedule I (2.5%).
- Retreaded or used pneumatic rubber tyres (other than retreaded tractor tyres), and solid or cushion tyres, treads and flaps: Schedule II (9%).
What should you do?
- Hotels, restaurants and caterers: review which input services qualify as same-line and apply the 2.5% cap in your ITC working from November 2026.
- EV operators and renters: check that battery charging cost is included in your consideration to qualify for the new items.
- Update your billing software for new rates from 1 November 2026.
See also our guide on ITC conditions and blocked credits and our overview of the new service exemptions from 1 November 2026. For help with GST compliance, see our GST services.
What to do next about gst rate itc changes
Review how gst rate itc changes affects your business: note the effective date, check your records and software, brief your team and keep a copy of the official text on file. Where the position is unclear for your case, take professional advice before filing or changing your process.
Official sources for gst rate itc changes
Always read the original text. You can find notifications, circulars and rules on the CBIC Tax Information Portal and file returns and applications on the GST Portal. This guide on gst rate itc changes is a summary and is not a substitute for the official text.
Frequently asked questions
What is the GST rate on electric vehicle passenger transport from 1 November 2026?
2.5% central tax (with equal State tax, 5% in total), where battery charging cost is included in the consideration, subject to the conditions in the notification.
How much ITC can a hotel claim on accommodation bought from another hotel?
Credit is allowed on same-line accommodation, capped at 2.5% where the supplier charges central tax above 2.5%.
From when do these changes apply?
From 1 November 2026.
This article is for general information only and is not tax, legal or financial advice. It is based on the text of the notification or circular as published by CBIC. Rules, rates and criteria change, so confirm the latest position with the official source or a professional before acting.
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