Hotel Stays Under ₹7,500 to Get Affordable from September 22 as GST Slashed to 5%

New Delhi, September 4, 2025: The hospitality sector is likely to get a massive boost as hotel rooms with tariffs of up to ₹7,500 per night will now charge only 5% GST without input tax credit (ITC) from September 22, instead of the present 12%. The change, as part of the GST Council’s far-reaching tax reform, is likely to make accommodations affordable and give India’s tourism infrastructure a much-needed boost.

GST Overhaul for Mid-Range Hotels Cuts Tax From 12% to 5% Starting September 22

Until the present, hotel rooms that cost up to ₹7,500 were taxed at 12% with ITC. The Council’s move to rationalize slabs to 5% and 18% has put mid-range hotels in the lower band, directly cutting costs for tourists. Industry players received the move warmly, underlining its ability to boost domestic tourism, leisure travel, and business stays, especially leading up to the festive and wedding season.

Hospitality CEOs Highlight GST Cuts’ Potential to Increase Travel Spending Nationwide

Rajesh Magow, Group CEO and Co-Founder of MakeMyTrip, said the tax reduction would increase discretionary income and drive travel demand throughout India. He added that making a hotel stay more affordable will enhance momentum in the domestic market.

Nikhil Sharma, Managing Director & COO, South Asia, Radisson Hotel Group, termed it a futuristic and apt reform, emphasizing that lower tax on mid-scale hotels would open up new gateways for weekend trips, business mobility, and leisure breaks.

The President of the Federation of Hotels and Restaurants Association of India (FHRAI), K Syama Raju, also pointed out that the shift would boost hotel occupation, stimulate expenditure throughout the hospitality chain, and make India more globally competitive as a tourist destination.

Ajay K Bakaya, Chairman at Sarovar Hotels & Director at Louvre Hotels India, labeled the move one in the right direction that will streamline tax structures while helping to boost consumer confidence.

Echoing the sentiment, Ebix Travels’ CFO Ankit Pathak said the decision is at the right moment, encouraging local travel during the marriage and festival season. He further added that maintaining the 5% GST on economy air tickets will keep airfares affordable for mass tourists.

As hospitality is already generating more than 5% of India’s GDP and is one of the biggest job creators, the rate cut is likely to pick up growth, generate jobs, and bring more domestic as well as international tourists to India.

T͏h͏e ͏GST re͏duction from 12% to 5% on hotel sta͏ys under ₹7͏,500, eff͏ective Septem͏ber ͏22, marks a significant structural r͏eform. It directl͏y ͏lowers ͏accomm͏odation costs, encoura͏ges domestic travel, and st͏rengthens͏ I͏ndia’s to͏uri͏sm inf͏rast͏ru͏ctu͏re. With m͏id-range ͏h͏otels en͏tering the lower tax slab, this͏ reform͏ is p͏oised to enhance ind͏ustry operations, occupancy rates, and ͏ove͏rall tourism-relat͏ed ͏economic ͏a͏cti͏vity͏.

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