GST Rate Cut Effect: Hotel Stays To Get Cheaper From September 22

New Delhi, Sep 21 (PTI) Hotel rooms with tariffs of Rs 7,500 or less will be cheaper by up to Rs 525 from Monday as the new GST rates kick in. For the hotel industry, the reduction of goods and services tax (GST) rates from 12 per cent to 5 per cent without input tax credit (ITC) is a clear growth catalyst, hospitality players said, asserting that it will strengthen revenues, encourage reinvestment, and enable hotels to deliver greater value and innovation for guests across the country.

Currently, hotel rooms with daily tariff of up to Rs 7,500 attract 12 per cent GST with ITC. According to the Hotel Association of India, the reduction in tax on hotel accommodation priced at Rs 7,500 and below will provide relief to travellers to the extent of 7 per cent on the room rate with the maximum of Rs 525 per room per night.

Similarly, travellers will gain on the GST on food menus. However, it argued that GST reforms must take a holistic, business-focused approach that retains ITC credit. Earlier this month, the GST Council cleared sweeping changes to the indirect tax regime, approving an overhaul of rates by limiting slabs to 5 per cent and 18 per cent effective from September 22, the first day of Navaratri.

Nikhil Sharma, MD & COO, South Asia, Radisson Hotel Group told PTI that the simplified tax structure provides much-needed clarity for hotel operators and travellers, enabling long-term planning and reinforcing confidence in the industry's growth trajectory. Rahool Macarius, Market Managing Director, Eurasia, at Wyndham Hotels & Resorts, which owns brands like Ramada, said India's travel and hospitality sector is on a strong growth trajectory, and the GST reform comes at exactly the right time.

"The impact will be most significant in the mid-market space where India's expanding middle class is driving demand for high quality yet affordable stays. By improving affordability, the revised slabs also unlock tremendous potential in Tier 2 and Tier 3 cities where value conscious travelers are increasingly fueling new demand," he added.