Starting from September 22, 2025, hotel rooms in India with tariffs of ₹7,500 or less will experience a price reduction of up to ₹525 per night. This change is a result of the new Goods and Services Tax (GST) rates, which have been reduced from 12% to 5% without input tax credit (ITC). The Hotel Association of India estimates that this reduction will provide relief to travelers to the extent of 7% on the room rate, with a maximum savings of ₹525 per room per night.
The hospitality industry views this reduction as a growth catalyst, expecting it to strengthen revenues, encourage reinvestment, and enable hotels to deliver greater value and innovation for guests. According to Nikhil Sharma, MD & COO of Radisson Hotel Group, the simplified tax structure provides much-needed clarity for hotel operators and travelers, enabling long-term planning and reinforcing confidence in the industry’s growth trajectory.
The GST reform is also expected to have a significant impact on the mid-market space, where India’s expanding middle class is driving demand for high-quality yet affordable stays. Rahool Macarius, Market Managing Director at Wyndham Hotels & Resorts, notes that the revised slabs will improve affordability and unlock tremendous potential in Tier 2 and Tier 3 cities, where value-conscious travelers are increasingly fueling new demand.
The reduction in GST rates is part of a broader overhaul of the indirect tax regime, which aims to limit slabs to 5% and 18% effective from September 22. While the Hotel Association of India welcomes the reduction in tax on hotel accommodation, it argues that GST reforms must take a holistic, business-focused approach that retains ITC.
Overall, the new GST rates are expected to provide relief to travelers and boost the hospitality industry, which is already on a strong growth trajectory. With the simplified tax structure and reduced rates, hotels are expected to deliver greater value and innovation for guests, while also driving growth and investment in the sector.