GST & Hospitality Sector: Specified Premises Explained

 Background, Online Opt-In Process, and Key Benefits

The GST framework for hotel accommodation services has undergone a significant procedural refinement with the introduction of an online opt-in mechanism for declaring “Specified Premises” on the GST Portal. While the concept itself was notified earlier, the availability of a system-driven filing process from FY 2026–27 marks an important step toward classification certainty and litigation reduction for the hospitality sector.

This article explains why the amendment was introduced, how the new online process works, and what practical benefits it offers to hotel and accommodation service providers.

Background: Why the Concept of “Specified Premises” Was Introduced

Vide Notification No. 05/2025 – Central Tax (Rate) dated 16 January 2025, the Government formally introduced the concept of “Specified Premises” for hotel accommodation services. The classification is relevant for determining the applicable GST rate, particularly for higher-value or premium accommodation offerings.

However, during FY 2025–26, there was a major operational gap:

• No electronic facility was available on the GST Portal
• Declarations were filed manually with jurisdictional officers
• Records were fragmented, non-standardised, and difficult to verify during audits

This led to uncertainty, especially during scrutiny proceedings, where taxpayers were required to justify both rate applied and eligibility retrospectively.

To address these issues and align the process with GST’s digital compliance philosophy, the Government has now enabled online filing of opt-in declarations for specified premises, effective from January 2026 for FY 2026–27 onwards.

Who Can Opt for Specified Premises Declaration

The online facility is available to:

• Existing registered regular taxpayers (including suspended registrations) supplying hotel accommodation services
• Applicants for new GST registration intending to supply such services

The facility is not available to:

• Composition taxpayers
• TDS/TCS registrants
• SEZ units or developers
• Casual taxpayers
• Cancelled registrations

Types of Declarations Available on the GST Portal

The GST Portal now hosts the following declarations:

Annexure VII

For existing registered taxpayers opting to declare premises as specified premises for a subsequent financial year.

Annexure VIII

For persons applying for new GST registration, to declare specified premises from the effective date of registration.

(Annexure IX for opt-out will be introduced separately.)

Timeline for Filing the Declarations

Existing Registered Taxpayers – Annexure VII

• Filing window: 1 January to 31 March of the preceding financial year
• For FY 2026–27, the window is 01.01.2026 to 31.03.2026

New Registration Applicants – Annexure VIII

• Must be filed within 15 days from the date of ARN generation
• Filing is allowed even before GSTIN allotment, provided the application is not rejected
• If the 15-day window lapses, the declaration can only be filed during the January–March window via Annexure VII

Mandatory Re-Filing for FY 2026–27

A critical compliance point:

• For FY 2025–26, declarations were filed manually
• For FY 2026–27, fresh electronic filing of Annexure VII is mandatory, even for taxpayers who had already declared specified premises earlier

Similarly, taxpayers declaring specified premises for the first time must also file Annexure VII during the same window.

Key Benefits of Declaring “Specified Premises”

1. Certainty of GST Rate Applicability

The foremost benefit is classification and rate certainty. Once premises are declared as specified:

• The applicable GST rate becomes clear and defensible
• Ambiguity arising from tariff fluctuations or dynamic pricing is substantially reduced

In GST, certainty often outweighs marginal rate differences.

2. Stronger Defence During Audit and Scrutiny

An electronically filed declaration:

• Is system-validated
• Generates an ARN
• Creates a permanent digital audit trail

This significantly strengthens the taxpayer’s position during:

• Departmental audits
• Scrutiny of returns
• Investigations by enforcement authorities

3. Reduced Risk of Reclassification and Litigation

Without a formal declaration, accommodation services are vulnerable to post-facto reclassification, leading to:

• Differential tax demands
• Interest and penalty exposure

Specified premises status narrows the scope for subjective interpretation, thereby reducing litigation risk.

4. Business and Pricing Stability

Once exercised, the option:

• Continues for subsequent financial years
• Requires no annual reassessment unless an opt-out is filed

This enables:

• Stable pricing policies
• Long-term corporate contracts
• Avoidance of mid-year GST surprises

5. Premise-Wise Flexibility for Multi-Property Operators

For hotel groups and entities with multiple properties:

• Declarations are premise-specific, not entity-wide
• Each premise receives a separate reference number
• Classification of one property does not impact others

This ensures clean segregation and clarity.

6. Enhanced Credibility with Corporate Clients and OTAs

Many corporate clients and travel aggregators insist on:

• Correct GST invoicing
• Rate certainty
• Clean compliance history

Specified premises declaration improves:

• Trust
• Onboarding efficiency
• Reduction in invoice disputes

7. Alignment with GST’s Digital Compliance Direction

The shift from manual to online declarations reflects a clear policy direction:

If it is not on the portal, it effectively does not exist.

Early alignment with portal-based declarations helps taxpayers stay prepared for:

• Data-driven scrutiny
• Automated notices
• System-based compliance checks

What Declaring Specified Premises Does Not Do

For clarity:

• It does not automatically reduce GST liability
• It does not grant exemptions or concessions
• It does not override tariff-based rate rules

Its value lies in certainty, defensibility, and risk management, not tax arbitrage.

Conclusion

Declaring “Specified Premises” under GST is no longer a mere procedural formality. It is a strategic compliance decision for hospitality businesses, particularly those operating in higher tariff segments.

With the online facility now available, taxpayers have an opportunity to:

• Lock in classification
• Strengthen audit defence
• Minimise future disputes

In a tax regime where disputes often arise from interpretational ambiguity rather than evasion, a clear, system-backed declaration today can prevent years of avoidable litigation tomorrow.

In GST, what you formally declare matters as much as what you earn.