Airbnb in India: The Tax Truth Nobody Told You

Think you’re earning lakhs on Airbnb? Wait till you meet the taxman  

That’s the reality no one tells you when you decide to rent out your flat in Goa, Delhi, or Bangalore. On the surface, Airbnb looks like an easy way to make money travelers book, you host, and you pocket the payout. But in India, the truth is far more complicated. Between GST, TDS, and income tax, your so-called “lakhs” shrink faster than you’d expect.

The Dream vs. Reality

Dream: List your flat → watch payouts hit your account → easy passive income.

Reality: Every booking faces three hidden cuts:

1. GST (Goods & Services Tax) – bumps up guest bills.
2. TDS (Tax Deducted at Source) – Airbnb slices your payout before you see it.
3. Income Tax – the final deduction when you file returns.

Example: Your Airbnb dashboard shows ₹10 lakh income. After taxes, you may only keep ₹6–7 lakh.

GST: The First Cut

What is it? A tax on short-term rentals. If your Airbnb income crosses:

• ₹20 lakh/year (₹10 lakh in some states like the Northeast) → GST registration is mandatory.

Rates:

• Below ₹7,500/night → 12% GST
• Above ₹7,500/night → 18% GST

Who pays? Guests. But the problem is it makes your stay more expensive.

Example bills:

• ₹6,500/night flat in Delhi → guest pays ~₹7,280 with GST + Airbnb fees.
• ₹10,000/night villa in Goa → bill crosses ₹12,000.

Interesting fact: Hotels charging below ₹1,000/night are GST-exempt. But Airbnb stays don’t get that relief, making budget hotels more attractive to price-sensitive travellers.

TDS: The Second Cut

What is it? A slice of your payout is collected upfront by Airbnb.

• With PAN → 0.1% TDS
• Without PAN → 5% TDS

Example:

• Earn ₹1,00,000 → ₹100 deducted (with PAN).
• Earn ₹1,00,000 → ₹5,000 deducted (without PAN).

This may seem tiny, but it adds up and messes with cash flow. Refunds only come during ITR filing.

Fun fact: In FY2024, Airbnb issued lakhs of TDS certificates to Indian hosts. Many casual hosts (like students or retirees) were shocked to see deductions they hadn’t expected.

Income Tax: The Final Bill

Even after GST and TDS, your income is still taxable.

From Budget 2025, Airbnb income is officially under Income from House Property.

What you can claim:

• 30% standard deduction (maintenance).
• Property tax paid.
• Up to ₹2 lakh home loan interest.

Example:

• Airbnb earnings: ₹12 lakh
• Less 30% deduction: ₹3.6 lakh
• Less property tax & loan interest: ₹2 lakh
• Taxable: ₹6.4 lakh → if in 30% slab → ~₹2 lakh tax.

Stat: Top hosts in Mumbai, Delhi, and Bangalore earn ₹1.5–2 crore/year. But their accountants spend just as much time filing returns as they do managing bookings.

Real Host Stories

• A Bangalore host saw ₹11,132 shrink by ₹605 due to TDS.
• A Goa villa owner’s Airbnb showed ₹7.3 lakh income, but only ₹5.2 lakh credited after taxes.
• Retirees renting spare rooms were stunned when GST notices landed in their inbox.

Relatable fact: A big chunk of Indian hosts are NRIs and retirees who thought of Airbnb as “pocket money,” only to get pulled into tax compliance.

Airbnb’s Moves in India

To make compliance less painful, Airbnb has:

• Partnered with H&R Block India for free GST tools (first year).
• Auto-issued TDS certificates.
• Grown massively—2024 bookings up 70% YoY in India.

Despite the taxes, domestic tourism is booming. Treehouses, farm stays, and heritage homes are among the fastest-growing Airbnb categories.

Why India ≠ The US

Here’s the kicker: the US gives hosts a huge break that India doesn’t.

The 14-Day “Masters’ Rule”:

• Rent out your US home for ≤14 days/year → zero tax, no matter how much you earn.
• Example: Augusta Masters → villas rented for ₹6 lakh/night → 10 nights = ₹60 lakh → all tax-free.

In India? No such rule. Every rupee is taxable.

Reason: India’s tax-to-GDP ratio is ~11% (vs 25–30% in OECD countries). The government can’t afford tax-free loopholes.

Fact: Countries like Japan and Spain have also clamped down some cap rentals at 60–90 days a year.

The Bigger Picture

Globally, Airbnb grew in tax grey zones. But India plugged those gaps early with GST, TDS, and income tax rules.

• In the US → Airbnb = side hustle + tax hack.
• In India → Airbnb = side hustle + tax headache.

Same app, same business model, but radically different realities.

Final Thoughts

Airbnb in India isn’t a scam, it can still be lucrative. But here’s what smart hosts do:

• Track income → crossing ₹20 lakh means GST.
• Always add your PAN → avoid 5% TDS.
• Price with taxes in mind → don’t undercut yourself.
• Hire a CA if you earn big → worth every rupee.

Airbnb can earn you lakhs, but the taxman always takes his share. Go in with eyes open, and you’ll avoid nasty surprises.