Money: GST, loans and subsidies

Loans and subsidies for Kerala homestays and resorts (2026)

By Homlystay, Kollam · Checked on the official websites on 6 November 2026 · 5 min read

Quick answer

There is no Kerala Tourism Department capital subsidy for homestays or resorts now. The support is in general business schemes: PMEGP for new units, NORKA NDPREM for people back from working abroad, KELS loans at 4%, KFC CMEDP loans at 6%, Mudra loans without collateral, and the Industries Department's K-RIIS. None is guaranteed: the bank or the department decides.

Scheme	For whom	What it gives
PMEGP	New micro units (no liquor)	15% to 35% of the project cost as margin money; service projects up to ₹20 lakh
NORKA NDPREM	People back after 2 or more years working abroad	15% capital subsidy up to ₹3 lakh, plus 3% interest subsidy for 4 years; loans of ₹1 lakh to ₹30 lakh
KELS	Units started on or after 1 April 2022, with Udyam	Loans up to ₹10 lakh at an effective 4% for 5 years
KFC CMEDP Edition III	MSMEs with Udyam; chief promoter 60 or younger	Loans up to ₹5 crore at 6%
PM Mudra	Small businesses; homestays are named in the 2025-26 Budget	Loans up to ₹20 lakh without collateral; no subsidy
K-RIIS (Industries Department)	Units started on or after 1 April 2023; a district committee decides if a stay counts	Up to 45% of new fixed investment on paper, at most ₹40 lakh for a micro unit
CGTMSE	Micro and small businesses with Udyam	A guarantee to your bank, so the loan needs less collateral; a yearly fee

PMEGP (new units only)

Only new micro enterprises: existing units are not eligible. Hotels are allowed, but not one that serves liquor.
Margin money: 25% of the project cost in a village (panchayat) and 15% in a town (municipality or corporation). For SC, ST, OBC, women, people with disabilities and ex-servicemen: 35% and 25%.
You put in 10% yourself (5% in the special categories). A service project can be up to ₹20 lakh.
A unit that already took another government subsidy is not eligible. Apply through the PMEGP portal or the District Industries Centre.

NORKA NDPREM (returned from abroad)

For people who return after working abroad for at least two years, to start a new business. The service sector is included.
15% of the project cost as capital subsidy, at most ₹3 lakh, released after the lender confirms 3 years of continuous running.
3% interest subsidy for up to four years, only while you repay without default. Loans from ₹1 lakh to ₹30 lakh through 19 lenders, including SBI, Canara Bank, Federal Bank, South Indian Bank, Kerala Bank and KFC.
Apply online on norkaroots.kerala.gov.in.

KELS: the 4% loan

The Kerala Entrepreneur Loan Scheme covers new businesses and expansions in manufacturing, service and trading set up on or after 1 April 2022, with Udyam registration. On loans up to ₹10 lakh the state pays interest down so you pay an effective 4%, for the first 5 years.

KFC CMEDP Edition III: up to ₹5 crore at 6%

Launched on 6 August 2026 for MSMEs with Udyam registration, new or existing. Loans up to ₹5 crore at 6% (the government bears 3% and KFC 2%). The chief promoter must be 60 or younger, with a CIBIL score of 650 or more. You put in at least 10%; repayment is at most 5 years, including up to 1 year of moratorium.

Mudra: up to ₹20 lakh, no collateral

Banks and other lenders give Mudra loans: Shishu up to ₹50,000, Kishore up to ₹5 lakh, Tarun up to ₹10 lakh, and Tarun Plus up to ₹20 lakh for those who repaid a Tarun loan. There is no subsidy, and the lender sets the interest rate. The 2025-26 Union Budget named Mudra loans for homestays.

K-RIIS: the largest on paper, with conditions

K-RIIS is the Kerala Industries Department's incentive scheme under the Industrial Policy 2023, not a Tourism Department scheme. It names "Hospitality & Tourism Services" among its sectors.

Capital subsidy: up to 45% of new fixed investment, at most ₹40 lakh (micro), ₹1 crore (small) or ₹2 crore (medium). For units that started on or after 1 April 2023, or an expansion that adds at least 25%. Apply online after you start, within 2 years. Land counts only up to 10%.
You must keep running for 5 years, or repay with 14% interest. The fee is 1% of the amount sanctioned (at least ₹20,000) plus GST.
Sustainability: 25% back on solar, sewage treatment, rainwater harvesting and water recycling, at most ₹25 lakh.
"Up to 45%" is a ceiling, not what you will get. For a plain resort or homestay, the district committee, chaired by the District Industries Centre's General Manager, decides whether it counts. Check "Know Your Incentive" on kriis.kerala.gov.in and ask your District Industries Centre.

CGTMSE: less collateral

Your bank applies, not you. The guarantee covers 75% to 90% of the loan, up to ₹10 crore per borrower, for a yearly fee of 0.37% to 1.20%. The bank may pass the fee to you.

What is not open

Stand-Up India ran until 31 March 2025; its successor is still being prepared.
Kerala Tourism's working capital loan scheme was COVID relief for 2020-21.
The Industries Department's Entrepreneur Support Scheme is for manufacturing only, not stays.

Kerala's government changed in May 2026, and schemes can be renamed or closed. Check each scheme's official page before you apply, and never pay anyone who promises you a subsidy.

Which ones fit your stay

StayOffice by Homlystay shows which of these schemes may fit your stay, with the limits for you, and makes a project report that your accountant and your bank can start from. The department or the bank decides.

Official sources

This is a plain guide, not legal or tax advice. Rules change: check with the office named here before you act.