India’s hospitality sector is set to get a welcome boost for travellers and hoteliers alike. The GST Council’s recent decision to lower taxes on hotel rooms priced below ₹7,500 per night; from 12% to 5%; promises to make stays more affordable for domestic travellers while supporting mid-market and budget hotels across the country.
From bustling metros to serene non-metro destinations, this move could encourage more Indians to explore their own country, especially during festive and travel-heavy seasons. Industry leaders are already weighing in on what this change means for tourism, hotel operations, and the broader travel ecosystem.
IHG Hotels & Resorts Perspective
“The GST Council’s decision is a progressive step that will positively impact India’s hospitality industry. By easing the tax obligations on guests with room rates below ₹7,500, the government has created a more supportive environment not just for mid market and budget hotels in metros, which play a significant role in India’s travel growth story, but also for hotels beyond the metro cities. This rationalisation will make quality hospitality more accessible to domestic travellers, further boost tourism demand, and reinforce India’s position as one of the world’s most dynamic hospitality markets.” – Sudeep Jain, Managing Director, South West Asia, IHG Hotels & Resorts.
Radisson Hotel Group Insight
“We appreciate the GST Council’s progressive step in rationalizing tax rates for hotel accommodation up to ₹7,500. This is a timely and welcome reform that will make quality stays more accessible to a wider base of Indian travellers and at the same time 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.” – Nikhil Sharma, Managing Director & COO, South Asia, Radisson Hotel Group
Ambuja Neotia Group Insight
“The rationalisation of GST rates is a measure that carries wide implications across multiple sectors of the economy. For hospitality, the reduction of tax on hotel rooms priced up to ₹7,500 per night—from 12% with input tax credit to 5% without ITC—will help make mid-market offerings more affordable and stimulate domestic travel, thereby strengthening the ecosystem of tourism and allied services. In real estate, healthcare, and educational infrastructure, the lowering of GST on construction materials and other inputs provides welcome cost relief. This will ease the burden of development and operating expenses in areas that directly influence quality of life and community well-being. While the absence of input tax credit in hospitality requires hotels to absorb upstream tax without set-offs, the path forward lies in a combination of thoughtful pricing, operational efficiency, and cross-sector synergies. On balance, these reforms align affordability with fiscal discipline, offering the potential for both demand stimulation and sustainable growth.” – Harshavardhan Neotia, Chairman, Ambuja Neotia group
MakeMyTrip View
“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 ₹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
StayVista Commentary
Amit Damani, Co-Founder of StayVista, shares his thoughts on the reduction from 12% to 5% for rooms below INR 7,500 per night: “The government has extended an early Diwali gift to Indian consumers. For the travel and hospitality sector, this reform will boost demand as hotels and homestays will pass on the benefit to travellers. Although what remains unclear is whether accounting will get more complex to administer, with respect to availing input tax credit, for travel and hospitality companies.”
Ebix Travels Insight
Ankit Pathak, Chief Finance Officer, Ebix Travels: “The GST Council’s latest reforms mark a significant step forward for the travel and hospitality ecosystem. By bringing hotel tariffs of up to ₹7,500 under a 5% 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% GST on economy air tickets ensures affordability for the mass traveller, which is vital for sustaining the momentum in domestic tourism.”
Statement from Hotel Association of India
The reduction of GST slabs, including hotel accommodation priced at ₹7,500 and below from 12% to 5%, is welcome and provides relief to travellers. However, removal of ITC may deter hotel investment and expansion, and retaining ITC with the reduced rate would be more beneficial.
Budget and mid-scale hotels stand to benefit, offering cheaper rooms and boosting domestic tourism during the festive season. Hotels are essential infrastructure, generating jobs, contributing to the economy, and supporting India’s vision for 2047.
Savings on essentials may increase discretionary spending in leisure and hospitality, aiding broader economic growth. Addressing industry-specific concerns is crucial to ensure holistic growth, continued investment, and India’s competitiveness, especially for MICE.
HAI continues to engage with the government to rationalise GST across all hotel categories and hopes the sector is recognized for its vital economic role rather than as a luxury segment.
Fine Acers Insights
“The decision to bring down GST from 12% with input credit to just 5% on hotel rooms priced under ₹7,500 is a welcome move. This change will attract a wave of consumers, especially mid-market travelers, who often hold back due to price considerations. Occupancy is projected to rise by 5%–7% in leisure markets and 3%–5% in business hubs, while overall revenue is expected to increase by at least 10%. With rising demand, there will be positive pressure on businesses to enhance consumer experience, improve service quality, drive repeat stays, expand loyalty programs, and strengthen outreach to Tier 2 and Tier 3 markets. Moreover, this step supports compliance and reduces the tax disputes that have long plagued the sector. Lower room rates will encourage longer stays, thereby boosting domestic tourism and building investor confidence,” said Dinesh Yadav, Founder & MD of Fine Acers.
Chalet Hotels on GST reforms: A call for equitable changes
“The recent GST announcements are progressive and in line with the larger vision of nation-building and sabka vikas. They will undoubtedly provide a positive impetus to the Indian economy. A big positive for Chalet and the hotel industry in general. Placing room tariffs below ₹7,500 in the 5% GST slab is a welcome step. At the same time, it is important to address a key concern for the smaller and budget hotels. Simultaneous withdrawal of Input Tax Credit (ITC) creates an unintended anomaly. To ensure the intent of the reform is fully realised, I would urge three corrective measures:
- Retain the benefit of ITC for this segment.
- Revise the tariff threshold upward to ₹12,000, with ITC, in line with current market dynamics.
- Link future tariff thresholds to the Consumer Price Index (CPI), so that periodic resets are not required.
These changes will make the framework more equitable, growth-friendly, and aligned with the government’s vision for tourism as a driver of inclusive development.” – Sanjay Sethi, MD & CEO, Chalet Hotels Limited
Leisure Hotels Group sees GST cut as festive boost for tourism
“The revision of GST to 5% could not have come at a better time for the travel and hospitality industry. As we move into the festive period, this change is likely to stimulate demand by making holidays more attainable for Indian travellers. Reduced taxation often translates into higher confidence to book longer stays and explore premium categories, which in turn boosts occupancies across both established destinations and newer, lesser-explored regions. For the industry, the implications are equally significant. A friendlier tax regime energises the entire tourism ecosystem — from hotels and operators to transport, guides, and artisans. It creates a virtuous cycle of higher footfalls, stronger local engagement, and greater investment in guest experiences. At Leisure Hotels Group, we see this as a progressive step that will not only sustain the recovery momentum but also open fresh opportunities to innovate and expand India’s hospitality landscape.” – Vibhas Prasad, Director, Leisure Hotels Group
FARRO on GST impact: Balancing consumer value and rising costs
“The move to bring food under a uniform 5% GST slab has made dining out a little more attractive for consumers at a time when discretionary spending is under pressure. Even a small reduction in the tax burden creates a sense of added value, often encouraging guests to dine out more frequently. For restaurants, though, the impact is more complex. While the 5% rate simplifies billing and reduces the apparent cost for customers, operators can no longer claim input tax credit on raw materials and services. This pushes backend costs higher, so menu prices may not actually drop as much as diners expect. The real task for the industry is to strike a balance between compliance, rising operating expenses, and profitability, all while delivering value. Many of us in the F&B sector are adapting through smarter menu engineering, tighter cost control, and innovative sourcing. Overall, the revised GST regime has the potential to build consumer confidence. Yet, allowing some tax input benefit for restaurants would make the system more equitable and sustainable.” – Vardaan Marwah, Chef Partner, FARRO
FHRAI hails GST reform as a major boost for Indian hospitality and tourism
“We welcome the GST Council’s decision to simplify hotel room tariffs into two slabs of 5% and 12%. Reducing the tax on rooms up to ₹7,500 to 5% 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% to India’s GDP and is among the largest job creators, this step will further strengthen our role in driving economic growth, generating employment for youth and women, and enhancing India’s global competitiveness. We see this as a progressive move that will help Indian tourism achieve its true potential and contribute significantly to the Government’s Vision 2047. While the hotel industry had been requesting a 5% slab with input tax credit (ITC), as is the practice in several other countries, we believe that even this initiative by the GST Council will benefit the hospitality sector substantially.” — K Syama Raju, President, FHRAI
Cygnett Hotels & Resorts sees GST cut as a boost for mid-scale hospitality
“The GST overhaul marks a turning point for India’s hospitality sector. By reducing GST on hotel stays under ₹7,500 to 5%, the government has effectively democratised travel. This will boost domestic tourism, encourage corporate travel to tier-2 and tier-3 cities, and improve occupancy for mid-scale hotels, which form the backbone of our industry. However, luxury hotels remain at 18%, which keeps India aligned with global practices, where premium stays are taxed at a higher rate. The challenge will be balancing this benefit with the loss of input tax credit (ITC), which could compress margins for some operators. Overall, the move signals a clear policy direction, making travel more affordable and inclusive, while still protecting the exclusivity of luxury experiences.” – Sarbendra Sarkar, Founder & MD, Cygnett Hotels and Resorts
Summit Hotels & Resorts highlights GST reform as a structural reset for hospitality and housing
“The reforms announced at the 56th GST Council are far more than a matter of taxation; they represent a structural reset in the way India approaches housing, travel, and consumption. By placing mid-scale hotel accommodation within the 5% bracket, the government has significantly broadened affordability in domestic tourism, ensuring that demand in emerging destinations can flourish. At the same time, the simplification of GST for residential real estate, through reduced construction costs and clearer slab structures, is poised to stimulate housing supply and bolster confidence, particularly across tier-II and tier-III cities. Hospitality and real estate are inextricably linked: affordable housing underpins urban growth, whilst accessible travel fuels mobility and commerce. A streamlined GST regime allows these sectors to reinforce one another, creating a powerful multiplier effect on employment, consumption, and investment. The task before industry leaders now is to harness these efficiencies and translate them into greater value not only for guests and homeowners, but for the wider economy.” — Sumit Mitruka, CEO & Founder, Summit Hotels & Resorts.
Thomas Cook India: Simplifying GST for travel and tourism
Mahesh Iyer – Managing Director and Chief Executive Officer, Thomas Cook (India) Limited “At the Thomas Cook India Group, we welcome the Government’s simplification of the GST structure across sectors — from daily essentials and healthcare to education, electronics, automobiles as well as travel and hospitality. The elimination of the 12% slab and the lowering of several categories to the 5% bracket, marks a decisive shift towards boosting affordability and driving increased consumption. Additionally, the earlier income tax exemption for income up to Rs. 12 lakhs, coupled with this GST reduction, is expected to result in higher disposable income. For the travel and tourism industry, this is a very positive development across B2C & B2B segments. With hotel tariffs up to ₹7,500 down to 5% from 12%, the domestic travel and tourism sector especially in the mid and upper-mid market stands to benefit significantly. Additionally, retaining economy airfares at the lower 5% slab ensures that travel remains accessible. The reform thus delivers a two-pronged impact: directly, through lower GST rates on travel-related services, and indirectly, by enhancing consumer purchasing power via reduced rates across several consumption sectors—at a strategically opportune time, just ahead of the festive season.”
CYK Hospitalities: Empowering startups in the F&B sector
Simranjeet Singh, Director, CYK Hospitalities: “The GST rationalisation represents an uplifting change for any startup or emerging brand in the F&B industry, as it promises an easier working life. Up until now, the multiplicity of tax slabs has posed serious troubles for the young entrepreneurs to construct a transparent price structure, to remain in compliance, and to contend with such buying customers who are cost-conscious. Two slabs with 5% for essentials and 18% for anything else enhance the clarity of choice when operating a new venture and deciding on product mix and expansion strategy. Greater transparency reduces compliance costs and gives confidence to investors in scalable F&B models. The product on a lower slab is beneficial for startups, as cheaper products create demand for QSR concepts, cloud kitchens, and packaged foods, whereas premium concepts purchase on the higher slab. Thus, by way of creativity, the reform empowers the ecosystem through ingenuity, credibility, and promising avenues of growth for entrenched players as well as burgeoning entrepreneurs.”
EaseMyTrip: Simplifying travel costs for domestic tourists
Rikant Pittie, CEO and Co-Founder, EaseMyTrip: “The GST reforms effective September 22nd are transformative for India’s travel and tourism sector. The simplified tax regime, which has reduced the earlier four GST slabs to just two – 5% and 18% – will make travel more affordable for people and boost overall demand. The reduction to 5% GST on hotel rooms up to ₹7,500 will not only encourage tourism but also help hoteliers increase occupancy across budget and mid-scale segments. These changes come at a perfect time ahead of the festive season and will significantly stimulate domestic tourism while bringing much-needed operational clarity to the industry.”
Rationalisation of GST and the need for clarity – by SaffronStays
“Rationalisation of GST rates is always a welcome move. Tourism revenues are also referred to as “invisible exports” as they earn foreign exchange, while generating employment across different allied sectors. It is heartening to see GST being rationalised and reduced to 5%. Would have loved to see the threshold of ₹7500 (set many years ago) to have been anchored to the present-day price index. Absence of input credits may actually drive up the costs, as many players will have to absorb the input taxes, and price it in the tariff. Having said that, I would have also liked to see the definition of unit being defined clearly as a “room”, to remove any chance of varied interpretations, and also bring about a level-playing field between hotels and homestays.” – Tejas Parulekar Founder, SaffronStays
