The Hotel Association of India (HAI) welcomes the consideration of rationalizing GST announced by the Prime Minister on 15th August 2025. HAI emphasized that such reforms are essential to position India as a top tourism destination globally and ensure competitiveness vis-à-vis other international destinations in achieving its goal of attracting 100 million foreign tourists annually by 2047.
Contribution of Tourism to GDP and Employment
The HAI also highlighted that the contribution of tourism to creating employment and inclusive growth are well known and with the right policy intervention, can achieve the goal of contribution of 10% to India’s GDP. To achieve India’s tourism Vision 2047 HAI has been recommending rationalization of the GST rates.
Current GST Structure and Need for Revision
Currently, hotel rooms priced up to ₹7,500 per day fall under the 12% GST bracket, a threshold set 6–7 years ago. HAI has urged the policy makers to review these slabs in line with inflation and raise it to Rs 15,000, noting that tax rates directly influence affordability for travellers and the overall competitiveness of India as a tourist destination.
Call for a Uniform GST Rate
In a representation to Finance Minister Nirmala Sitharaman, who also chairs the GST Council, the Association called for a uniform GST rate of 5% with input tax credit (ITC) across hotels, restaurants, and tourism services. This, Hotel Association of India stressed, will ease compliance, improve the ease of doing business, and stimulate investment and job creation.
A Step Towards Competitiveness
“GST rationalisation has the potential to transform Indian hospitality into a globally competitive force. While we welcome the Council’s consideration of a simplified structure, it is equally critical to align tariff thresholds with inflation and global benchmarks. To position India as a top five tourism destination globally as envisaged, India’s competitiveness will have to be enhanced. The rate of 18% tax for hotels is too prohibitive, increasing hotel tariff to put India’s competitiveness globally at risk. The much needed broad rationalization for hotels should be such as to encourage greater productivity and larger contribution to GDP and to attract urgently needed investments in the sector,” said KB Kachru, President, Hotel Association of India.
