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GST Council led by Nirmala Sitharaman cuts GST on hotel rooms under Rs 7500 to 5 percent from September 22, 2025, aiming to boost tourism and discretionary spending.
In a sweeping reform, the GST Council, led by Finance Minister Nirmala Sitharaman, has approved a sharp overhaul of the Goods and Services Tax (GST) structure.
The GST Council, led by Finance Minister Nirmala Sitharaman, has decided to promote tourism and discretionary spending by reducing the GST on hotel rooms under Rs 7500 to 5 per cent without ITC (Input Tax Credit) from the earlier 12 per cent GST with ITC.
It will directly make hotel rooms under Rs 7500 cheaper, promoting tourism and discretionary income. The revised rates will come into effect from September 22, 2025.Â
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.
Rikant Pittie, CEO and Co-Founder, EaseMyTrip added that 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, ” he said.
Hotel rooms priced under Rs 1,000 per night will remain exempt from GST, while premium hotels charging above Rs 7,500 will continue to attract 18%. This change is expected to ease costs for a wide range of travelers.
The GST Council also called to define ‘specified premises’, so that a stand-alone restaurant cannot declare itself as a ‘specified premises’ and consequently cannot avail the option of paying GST at the rate of 18% with ITC.
Air travel will also see relief
Economy class tickets will now carry 5% GST, down from 12%, and business class fares will be taxed at 12% instead of 18%. The move aims to reduce travel expenses for both leisure and business passengers, potentially boosting demand for flights.
In a sweeping reform, the GST Council, led by Finance Minister Nirmala Sitharaman, has approved a sharp overhaul of the Goods and Services Tax (GST) structure. Effective September 22, the system will be simplified into just two main slabs of 5% and 18%, replacing the current 12% and 28% rates, with a special 40% slab for luxury and sin goods. Billed as a “historic Diwali gift” for citizens and businesses, the reforms aim to lower the cost of living, boost consumption, and spur economic activity.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
September 04, 2025, 14:15 IST
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