GST rate cut strengthens India’s travel sector with affordable stays

The publish GST rate cut strengthens India’s travel sector with affordable stays appeared first on TD (Travel Daily Media) Travel Daily Media.

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Previous forecasts for travel and hospitality predicted constructive development which had been disrupted by the Pahalgam Terror Attack on vacationers, Indo Pak escalated tensions and the Air India crash. Just in time for the festive season the Govt has given succour to the hospitality and travel business by slashing the GST charges.

The GST Council’s 56th assembly on third September, chaired by Finance Minister Nirmala Sitharaman, introduced key reforms to India’s oblique tax construction. Let us discover out what the business has to say…

Quality stays now extra accessible to a wider base of Indian travellers

 Nikhil Sharma, Managing Director & COO, South Asia, Radisson Hotel Group. Stated: “We admire the GST Council’s progressive step in rationalizing tax charges for lodge lodging as much as INR 7,500. This is a well timed and welcome reform that can make high quality stays extra accessible to a wider base of Indian travellers and on the similar time strengthen the nation’s positioning as a high-potential tourism hub. By decreasing the tax burden on mid-scale and higher mid-scale inns, the federal government has unlocked new alternatives for stronger home travel, weekend leisure breaks, and enterprise mobility – components which can be vital to the hospitality sector’s development. This transfer displays a deep understanding of business dynamics and traveller aspirations, and we’re assured it is going to speed up momentum throughout the hospitality panorama whereas reinforcing India’s ambition of changing into one of many world’s main travel locations.”

More reform wanted to make the framework extra equitable

Dr. Sanjay Sethi, MD & CEO, Chalet Hotels Limited stated: “The current GST bulletins are progressive and in line with the bigger imaginative and prescient of nation constructing and sabka vikas. They will undoubtedly present a constructive impetus to the Indian financial system. An enormous constructive for Chalet and the lodge business normally.

Placing room tariffs beneath INR7,500 within the 5% GST slab is a welcome step. At the identical time, it is very important deal with a key concern for the smaller and price range inns. Simultaneous withdrawal of Input Tax Credit (ITC) creates an unintended anomaly.

To make sure the intent of the reform is totally realised, I might urge three corrective measures:

1. Retain the advantage of ITC for this section.
2. Revise the tariff threshold upward to INR12,000, with ITC, in line with present market dynamics.
3. Link future tariff thresholds to the Consumer Price Index (CPI), in order that periodic resets aren’t required.

These adjustments will make the framework extra equitable, growth-friendly, and aligned with the federal government’s imaginative and prescient for tourism as a driver of inclusive improvement.”

Rajesh Magow, Co-Founder and Group CEO, MakeMyTrip stated: “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 INR7,500 will make stays more affordable for a large share of Indian travellers, reinforcing demand in the domestic market.”

This reform will straight increase tourism demand

Okay Syama Raju, President, FHRAI stated: “We welcome the GST Council’s resolution to simplify lodge room tariffs into two slabs of 5% and 12%. Reducing the tax on rooms as much as INR7,500 to five% will make Indian inns extra affordable and engaging to each home and worldwide travellers. This reform will straight increase tourism demand, enhance occupancy, and encourage extra spending throughout the hospitality worth chain. As a sector that already contributes over 5% to India’s GDP and is among the many largest job creators, this step will additional strengthen our function in driving financial development, producing employment for youth and girls, and enhancing India’s world competitiveness. We see this as a progressive transfer that can assist Indian tourism obtain its true potential and contribute considerably to the Government’s Vision 2047. While the lodge business had been requesting a 5% slab with enter tax credit score (ITC), as is the follow in a number of different international locations, we imagine that even this initiative by the GST Council will profit the hospitality sector considerably.”

Healthier development within the hospitality sector

Neha Kapoor, GM, Hyatt Place Gurgaon acknowledged: “We welcome the government’s decision to slash the GST rate to 5% on room tariffs up to INR7,500. It makes quality hotel stays more affordable and accessible to a wider base of travellers while adding real value to their experience. We anticipate this change will translate into stronger demand and improved occupancy levels. Beyond the immediate benefits, it also paves the way for healthier growth in the hospitality sector, supports tourism, and strengthens the industry’s contribution to the economy.”

Reinforces the very important function of the mid-market section in India’s tourism development story

Perkin Rocha, Founder & CEO, ECKO Hotels & Resorts stated: “We at Ecko Hotels & Resorts applaud the GST Council’s move to reduce the tax rate on hotel rooms priced up to INR7,500 per night from 12% (with input tax credit) to 5% (without ITC), effective September 22. This timely reform is poised to make quality accommodations more accessible to India’s growing domestic traveler base, particularly as we enter the festive and wedding season. While the removal of input tax credit presents operational challenges for hoteliers, this rationalization is an important step toward stimulating demand, boosting occupancy, and reinforcing the vital role of the mid-market segment in India’s tourism growth story.” 

Will assist hoteliers enhance occupancy throughout price range and mid-scale segments

Rikant Pittie, CEO and Co-Founder, EaseMyTrip acknowledged: “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 INR7,500 will not only encourage tourism but also help hoteliers increase occupancy across budget and mid-scale segments. These changes come at a perfect time ahead of the festive season and will significantly stimulate domestic tourism while bringing much-needed operational clarity to the industry.”

 Will encourage company travel to tier-2 and tier-3 cities

Sarbendra Sarkar, Founder & MD, Cygnett Hotels and Resorts stated: “”The GST overhaul marks a turning level for India’s hospitality sector. By decreasing GST on lodge stays below INR7,500 to five%, the federal government has successfully democratised travel. This will increase home tourism, encourage company travel to tier-2 and tier-3 cities, and enhance occupancy for mid-scale inns, which kind the spine of our business. However, luxurious inns stay at 18%, which retains India aligned with world practices, the place premium stays are taxed at the next rate. The problem will likely be balancing this profit with the lack of enter tax credit score (ITC), which might compress margins for some operators. Overall, the transfer indicators a transparent coverage route, making travel extra affordable and inclusive, whereas nonetheless defending the exclusivity of luxurious experiences.”

Broadened affordability in home tourism

Sumit Mitruka, CEO and founder, Summit Hotels & Resorts acknowledged: “The reforms introduced on the 56th GST Council are way over a matter of taxation; they symbolize a structural reset in the best way India approaches housing, travel, and consumption. By putting mid-scale lodge lodging throughout the 5% bracket, the federal government has considerably broadened affordability in home tourism, guaranteeing that demand in rising locations can flourish. At the identical time, the simplification of GST for residential actual property,  via decreased development prices and clearer slab constructions, is poised to stimulate housing provide and bolster confidence, significantly throughout tier-II and tier-III cities.

Hospitality and actual property are inextricably linked: affordable housing underpins city development, while accessible travel fuels mobility and commerce. A streamlined GST regime permits these sectors to bolster each other, creating a strong multiplier impact on employment, consumption, and funding. The process earlier than business leaders now could be to harness these efficiencies and translate them into higher worth not just for company and householders, however for the broader financial system.” 

Lower room charges imply longer stays

Dinesh Yadav, Founder & MD of Fine Acers acknowledged: “The resolution to deliver down GST from 12% with enter credit score to only 5% on lodge rooms priced below INR7,500 is a welcome transfer. This change will drive a wave of customers, particularly the mid-market travellers, who normally take a step again due to worth concerns. Occupancy is projected to go up by 5%-7% in leisure markets and three%-5% in enterprise hubs, whereas income at giant is anticipated to go up by no less than 10%.
With growing demand, there may be constructive stress on companies to enhance client expertise and supply higher service, drive repeat customers, enhance loyalty applications and enhance outreach to customers from the Tier 2 and three markets. Moreover, it fairly merely works for compliance and ensures lesser tax disputes which were plaguing the sector for lengthy. Lower room charges imply longer stays, thereby driving home tourism, constructing investor confidence.” 

Strengthens our dedication to ‘Make in India’ with ease in enter prices

Ahmed Abdel Wahab, General Manager, Mars Wrigley India acknowledged: “We welcome the GST Council’s decision to move a wide range of FMCG products, including chocolates, to the 5% tax slab. The reduction of GST on many raw materials from 12% or 18% down to 5% is also a significant relief that will ease input costs and strengthen supply chains for manufacturers like Mars Wrigley. This forward-looking reform comes at an ideal time during this festive season, helping make everyday treats more affordable for consumers preparing to celebrate. With these tax reductions, the industry can respond quickly – restoring value in packs, innovating new formats, and supporting retailers nationwide. Importantly, this step further strengthens our commitment to ‘Make in India’ by reinforcing trust in the government’s vision of creating a supportive manufacturing ecosystem and a mutually beneficial environment for all players to invest and grow. We believe this landmark step will empower the entire FMCG sector to deliver greater choice, freshness, and value for Indian families during this festive period and beyond.”

Airfares throughout each financial system and enterprise courses have turn into lighter

Hari Ganapathy, Co-founder of Pickyourtrail, stated: “The authorities’s transfer to decrease GST on flights and inns is greater than only a tax revision, it’s an invite to travel. Airfares throughout each financial system and enterprise courses have turn into lighter, whereas the vast majority of lodge stays, which fall within the INR 1,000 – INR 7,500 bracket, now carry much less tax weight. For on a regular basis travellers, this straight interprets into extra accessible journeys.

When these financial savings circulate via to travellers, the affect is quick: a household could select to remain an additional evening, a enterprise traveller would possibly improve for consolation, and teams might discover new locations with out stretching budgets. Timed with India’s festive calendar and the busy travel months forward, this step units the stage for stronger demand each throughout the nation and overseas.

When flights and stays turn into simpler on the pockets, travellers are capable of design journeys round experiences relatively than compromises. That’s the place the true good thing about this reform lies.”

Travel stays accessible

Mahesh Iyer, Managing Director and Chief Executive Officer, Thomas Cook (India) Limited stated: “At the Thomas Cook India Group, we welcome the Government’s simplification of the GST construction throughout sectors — from day by day necessities and healthcare to schooling, electronics, vehicles in addition to travel and hospitality. The elimination of the 12% slab and the reducing of a number of classes to the 5% bracket, marks a decisive shift in direction of boosting affordability and driving elevated consumption. Additionally, the sooner earnings tax exemption for earnings as much as Rs. 12 lakhs, coupled with this GST discount, is anticipated to end in greater disposable earnings. For the travel and tourism business, it is a very constructive improvement throughout B2C & B2B segments.  With lodge tariffs as much as INR7,500 per down to five% from 12%, the home travel and tourism sector particularly within the mid and upper-mid market stands to learn considerably. Additionally, retaining financial system airfares on the decrease 5% slab, ensures that travel stays accessible. The reform thus delivers a two-pronged affect: straight, via decrease GST charges on travel-related providers, and not directly, by enhancing client buying energy through decreased charges throughout a number of consumption sectors – at a strategically opportune time, simply forward of the festive season.”

Sandeep Arora, Director, Brightsun Travel, India stated: “We welcome the federal government’s resolution to cut back the GST charges from 12% to five% on price range inns and financial system flights, a reduction to each travel business and the patron. This transfer will make travel extra affordable and accessible to numerous Indian travellers, boosting the home travel and inspiring extra individuals to discover completely different locations. We are excited to assist prospects benefit from these financial savings and plan memorable journeys with out breaking the financial institution.”

Anuj Puri, Chairman – ANAROCK Group acknowledged: “The forthcoming GST adjustments, which is able to go into impact from September 22, 2025, may have a constructive affect on the Indian residential, retail, and workplace actual property sectors.

Residential Real Estate

• Lower development prices – Reduced GST on development supplies like cement can cut back development prices by as a lot as 3-5%. Developers, particularly these engages in creating affordable housing, will get main reduction when it comes to money flows and margins. ANAROCK Research reveals that the affordable housing class (beneath Rs 40 lakh) has seen its share of complete gross sales decline from 38% in 2019 to only 18% in 2024. The share of latest provide dropped much more dramatically from 40% in 2019 to only 12% in H1 2025. The decreased development prices, if handed on to homebuyers, can increase demand in these segments.

• Clearer taxation – The simplified GST construction does away with the outdated five-slab system and now has solely two major slabs of 5% and 18%, along with a 40% rate on luxurious and so-called ‘sin goods’. The resultant pricing readability will go a good distance in enhancing general client confidence. The simplified framework will make the tax implications of shopping for properties clearer and this readability can doubtlessly deliver vital numbers of first-time patrons and fence-sitters to the market. This would have an particularly notable affect in tier-II and tier-III cities.

Commercial Real Estate

Commercial actual property presently attracts 12% GST with Input Tax Credit (ITC) obtainable. However, current developments have sophisticated the panorama a bit. The elimination of ITC on industrial property leasing implies that builders will now not be capable to declare ITC on project-related prices. This retrospective modification could enhance operational prices and rental costs for workplace areas and different industrial properties.

The Reverse Charge Mechanism (RCM) for industrial property leases by unregistered suppliers, which requires tenants relatively than landlords to pay 18% GST on such leases, provides compliance burden for companies renting industrial areas. 

Retail Real Estate

• Better mission viability – The decreased GST on constructing supplies will end in decrease enter prices for builders and assist velocity up the availability of retail actual property tasks. Since purchasing centres and retail complexes will now incur decreased development prices, this will end in extra aggressive rental charges.

• Supply chain advantages – The GST rationalization will deliver down logistics prices and assist streamline provide chains, benefiting retail actual property operations. However, retail properties used for industrial functions will proceed to draw 18% GST on rental earnings.

Sector-Wide Boost

These reforms are main constructive shift for the Indian actual property business. Apart from improved clear and ease of compliance, this simplified GST system will take away most classification confusion and disputes. Since builders will now face decrease administrative burdens, they may be capable to concentrate on what actually issues – well timed completion of tasks and general buyer satisfaction – relatively than on methods on means to avoid wasting on taxes.

We can logically count on this main reform to draw extra institutional funding into the Indian actual property sector, whereas additionally boosting housing provide throughout the nation. The authorities is dovetailing these reforms with the festive season to maximise their constructive affect on consumption. This is a serious reduction amid the continued macro-economic challenges and their impacts on sentiment and enterprise outcomes.

The reforms are particularly constructive information for affordable housing. India presently has a shortfall of practically 1 crore price range properties in city markets, and this quantity might rise to 2.5 crore by 2030 with out targeted interventions. These GST reforms deliver decrease development prices and improved ease of compliance, which might go a good distance in direction of reversing this development making homeownership extra accessible to middle-class households.”

The publish GST rate cut strengthens India’s travel sector with affordable stays appeared first on Travel Daily Media.