GST bonanza: Hotel rooms up to Rs 7,500 tariff to become cheaper, drive tourism

New Delhi: Hotel rooms with tariffs up to Rs 7,500 per day are set to become cheaper as they will attract a lower GST rate of 5 per cent, without input tax credit (ITC), from September 22, a move expected to boost tourism, hospitality industry players said on Thursday.

Currently, hotel rooms with daily tariff of up to Rs 7,500 attract 12 per cent goods and services tax (GST) with input tax credit.

The GST Council on Wednesday cleared sweeping changes to the indirect tax regime, approving an overhaul of rates by limiting slabs to 5 per cent and 18 per cent effective from September 22, the first day of Navaratri.

"The... move that will act as a stimulus to the Indian economy by boosting discretionary income and fuelling consumption across sectors. For travel and tourism, the cut in GST on hotel rooms priced below Rs 7,500 will make stays more affordable for a large share of Indian travellers, reinforcing demand in the domestic market," Rajesh Magow, Co-Founder and Group CEO, MakeMyTrip, said.

Nikhil Sharma, Managing Director & COO, South Asia, Radisson Hotel Group, welcomed the GST Council's "progressive step", describing it as a timely and welcome reform that will make quality stays more accessible to a wider base of Indian travellers and strengthen the country's positioning as a high-potential tourism hub.

"By reducing the tax burden on mid-scale and upper mid-scale hotels, the government has unlocked new opportunities for stronger domestic travel, weekend leisure breaks, and business mobility -- factors that are critical to the hospitality sector's growth. This move reflects a deep understanding of industry dynamics and traveller aspirations, and we are confident it will accelerate momentum across the hospitality landscape while reinforcing India's ambition of becoming one of the world’s leading travel destinations," he stated.

Echoing similar sentiments, President of Federation of Hotels and Restaurants Association of India K Syama Raju said the reduction will make Indian hotels more affordable and attractive to both domestic and international travellers.

"This reform will directly boost tourism demand, increase occupancy and encourage more spending across the hospitality value chain. As a sector that already contributes over 5 per cent to India's GDP and is among the largest job creators, this step will further strengthen our role in driving economic growth, generate employment for youth and women, and enhancing India's global competitiveness," he added.

Ajay K Bakaya, Chairman, Sarovar Hotels & Director, Louvre Hotels India, said the reform represents a step in the right direction, simplifying structures and boosting consumer sentiment.

"We hope future measures will build on this momentum to enable holistic growth of the sector, ensuring that hospitality continues to contribute strongly to India's GDP, employment generation and global competitiveness as a tourism destination," he added.

Ankit Pathak, Chief Finance Officer, Ebix Travels, said by bringing hotel tariffs of up to Rs 7,500 under a 5 per cent GST slab, the Council has created a strong incentive for travellers to explore more destinations, especially during the upcoming festive and wedding season when demand peaks.

At the same time, retaining a lower 5 per cent GST on economy air tickets ensures affordability for mass travellers, which is vital for sustaining the momentum in domestic tourism.