Cheaper stays ahead: Hotels under Rs 7,500 to cost up to Rs 525 less as new 5% GST kicks in from tomorrow

Currently, hotel rooms with daily tariff of up to Rs 7,500 attract 12 per cent GST with ITC.

From Monday, hotel rooms priced at Rs 7,500 or less per night will become cheaper by up to Rs 525, as the revised Goods and Services Tax (GST) rates come into effect.

The GST rate on such hotel rooms has been reduced from 12% with input tax credit (ITC) to 5% without ITC — a change industry players describe as a strong growth catalyst. They believe the move will boost revenues, spur reinvestment, and help hotels deliver better value and innovation for guests across India.

Industry leaders welcomed the move. Nikhil Sharma, MD & COO, South Asia, Radisson Hotel Group, told PTI, “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, Wyndham Hotels & Resorts — the parent of 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.”

According to the Hotel Association of India, the rate cut will translate into a 7 per cent relief for travellers on tariffs of up to Rs 7,500, capped at Rs 525 per room per night. “Similarly, travellers will gain on the GST on food menus,” it said, while stressing that GST reforms must ultimately take a “holistic, business-focused approach” that retains ITC credit.

Earlier this month, the GST Council approved sweeping changes to the indirect tax structure, consolidating slabs to 5 per cent and 18 per cent, effective September 22, the first day of Navaratri.