Image of GST Reform Meeting @ indianexpress
In a significant move set to benefit millions of travelers, the GST Council has approved a major revision of tax rates on hotel stays and air travel. This decision, finalized during its 56th meeting on September 3, 2025, is a game-changer for the Indian tourism and hospitality sectors. The new rates, effective from September 22, 2025, are designed to make travel more affordable and boost domestic tourism.
Will Your Hotel Stays Be Cheaper after GST cut?
Yes, they will. One of the most impactful changes is the reduction in GST on hotel rooms, especially those popular with a wide range of travelers. Here’s a look at the revised structure:
- Zero GST Remains: Rooms with a tariff of up to ₹1,000 per night will continue to be exempt from GST. This is a great benefit for budget travelers.
- Significant Tax Cut: Rooms priced between ₹1,000 and ₹7,500 per night will now be taxed at a much lower 5% GST, down from the previous 12%. This is a huge relief for middle-class families and corporate travelers who prefer mid-range hotels. But under this lower rate, hoteliers are not entitled to claim input tax credit (ITC).
- Premium Stays: The GST rate for premium hotels with tariffs above ₹7,500 per night will remain unchanged at 18%. This ensures that the tax burden is differentiated across various hotel categories.
This tax reduction is expected to have a direct positive impact on your travel budget. For a 3-night stay in a hotel room costing ₹5,000 per night, you will now pay ₹750 in GST, as opposed to the previous ₹1,800. This is a massive saving of over ₹1,000 on just one booking.
Will Your Flights Be Cheaper?
Yes, flying just became more affordable, especially for economy class passengers. The GST Council has revised the rates for air travel, aiming to give a much-needed push to domestic air travel demand.
- Economy Class: Economy class air tickets will now attract a 5% GST, a significant drop from the earlier 12%. This makes flying more accessible to a larger population and is a key driver for promoting regional connectivity.
- Business Class: Travel in business class will also see a tax reduction. The GST rate has been lowered to 12%, down from the previous 18%.
The goal behind this change is to stimulate demand, particularly in the domestic market. With lower ticket prices, more people may opt for air travel, which could benefit airlines and airports across the country.
How These Changes Will Affect Your Pocket
The revised GST slabs are a clear win for travelers. Here’s a simple breakdown of the financial benefits:
- Lower Total Costs: The most direct impact is the reduction in your total travel expenses. Both flight and hotel bookings will now be more budget-friendly.
- Increased Savings: The savings from these tax cuts can be redirected to other parts of your trip, such as dining, activities, or shopping.
- Boost for Tourism: By making travel cheaper, the government aims to encourage more people to explore domestic destinations. This could lead to a significant boom for the tourism industry, from tour operators and local businesses to hospitality staff.
The GST Council’s decision is being hailed as a progressive step towards making travel more inclusive and affordable. As these changes take effect on September 22, 2025, travelers can look forward to more wallet-friendly trips and a more vibrant domestic tourism sector.