One of the most notable announcements is the exemption from GST on the tariff for a hotel room at INR 75,000 per night. Instead of the first 12% with the incoming tax credit, these rooms will now be required to be just 5% without ITC. It effectively reduces the cost of housing for millions of domestic travellers who depend on mid-class and budget hotels.
From September 22, the tax rates for revised goods and services in India will be declared by Finance Minister Nirmala Sitarman. The latest rationalism for this GST government is also planned to reopen the landscape for travel and tourism. Following the recommendations of the 56th GST Council meeting, new rates will come into effect soon, aiming to simplify the slabs that directly impact hotels and air travel, the two primary components of most journeys.
Hotels: Cheaper stays for budget travellers
One of the most significant announcements is the reduction of GST on hotel room tariffs up to INR 7500 per night. Instead of the first 12% with incoming tax credit, these rooms will now be required to just 5% without ITC. It effectively reduces the cost of housing for millions of domestic travelers who depend on mid -class and budget hotels. Industry experts see it as a very important boost for India's hospitality region, and comes after disturbances caused by the epidemic. Cheap tariffs encourage Helgens Gateways, commercial travel and more extended holiday stays. For incoming tourists, changes also increase India's competition compared to destinations in Southeast Asia, where space taxes are often less.
Air travel
The GST Council maintained 5% GST on economy class air tickets, a relief for budget flyers who make up the majority of domestic passengers. Low-cost carriers, already popular in India's aviation market, are expected to benefit as travel demand remains price-sensitive. The remaining categories will be subject to an 18% GST.
Travel industry outlook
With GST rates streamlined to just two slabs —5% and 18% — the Council's goal is to simplify compliance and reduce ambiguities. Overall, the GST reforms tilt in favour of boosting mass tourism while aligning with the government's long-term vision of making travel within India more accessible.
Industry reaction:
Welcoming the move, Rajesh Magow, Co-Founder and Group CEO of Makemytrip, said, "The rationalisation of GST slabs is a welcome 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 7500 will make stays more affordable for a large share of Indian travellers, reinforcing demand in the domestic market."
Aviral group CEO at Zostel and Zo World said, "As a prominent player in India's dynamic hospitality and travel sector, we at Zostel recognise the far-reaching impact of the recent GST reforms. The decline in GST rate on hospitality services up to 5% is an important step towards promoting a more transparent and predictable tax structure. This improvement not only makes travel and housing cheaper for guests, but also provides companies a clear route for development and stability. We are confident that these changes will stimulate long-term growth in the hospitality sector, benefiting both the industry and the larger economy while enhancing the overall guest experience."
"The GST revisions are timely and will influence travel behaviour in interesting ways. The reduction to 5% on hotel tariffs makes domestic travel more inclusive, encouraging more families and young travellers to explore India. On the other hand, the higher GST on premium airfares may shift some demand towards economy cabins. Still, it also opens up room for operators to rethink value-driven premium offerings. For the industry, this is not just about price correction, it's about recalibrating experiences, reimagining itineraries and ensuring that travel remains aspirational yet accessible. At Cox and Kings, we see these changes as an opportunity to innovate and guide travellers towards smarter, more fulfilling journeys," said Karan Agarwal, Director, Cox and Kings.
#bookmybooking #gst #traveltax #tourismupdate #travelindustry #touroperator #indiatourism