GST Reforms 2025: Expert Insights and Industry Perspectives

Hotel Association of India

Hospitality Still Awaits Pragmatic Gst Reforms

• Sector – A Key Pillar Of The Economy – Unheard Again
• Removal Of Itc Benefits May Hurt Industry

The structural reforms including reduction of the number of slabs were a need of the hour and are  welcome. The rate on hotel accommodation priced at ₹7,500 and below from 12% to 5% may provide some  relief only to the travellers. Removal of ITC may infact prove detrimental for hotel companies operating  in the segment and may act as a disincentive for much needed investment and expansion in the category;  the full impact on hotel operators will depend on the eDects of the ITC reduction, which experts will need  to assess further. It would prove to be beneficial to retain the rate at 5% whilst allowing ITC, and we  urge the Finance Minister to consider this progressively.  

Budget and mid-scale hotels are likely to benefit thereby providing for cheaper hotel rooms for consumers  and provide a timely boost to domestic tourism as we approach the festive season, we are of the belief that  an upward adjustment of the slab could have generated more demand, more investment and increased  revenues for the government. 

Hotels are providers of essential infrastructure for tourism that has been identified as a key pillar of the  economy and India’s realisation of its vision for 2047 . Hotels generate jobs, add to the socioeconomic  fabric of the region and have the highest multiplier eDect . It is unfortunate therefore that the industry has  yet again been left wanting, as compared to other consumption-based sectors. Hotel restaurants remain  at existing rates, so the overall change for the sector is limited.  

Against this backdrop, one positive development is that the savings on essentials may increase  discretionary spending in leisure and hospitality, supporting broader economic growth. 

As the hon’ble Prime Minister highlighted, the objective of this exercise is to boost consumption  expenditure on items that aDect the common person. The broader impact of the cuts will certainly have  a positive impact on the economy thereby proving beneficial to the nation. However, addressing  industry specific concerns is crucial to ensure that the sector grows holistically across categories and  continues attract investment and contribute meaningfully to India’s GDP, Jobs and global competitiveness  as a tourist destination especially for MICE. 

HAI remains committed to continued engagement with the government to rationalise GST structure across  all hotel categories and hopes that the sector will be accorded the correct position in the economy given  its key role and not be viewed as a luxury or elite sector .

Rajesh Magow, Co-Founder and Group CEO, MakeMyTrip

“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.”

Ritwik Khare, Founder & CEO of ELIVAAS

“The government’s decision to revise GST into a simplified two-slab structure is a very welcome move for the hospitality industry. By reducing tariffs up to ₹7,500 to 5%, the reform eliminates the earlier complexity of multiple brackets and creates a transparent and guest-friendly ecosystem. The current reduction in GST for hotels and flights will also make premium hospitality more accessible to a larger section of society, strengthening India’s competitiveness as a tourism destination. We truly appreciate the structured clarity brought in by the government through this reform.

From a tourism standpoint, India has fantastic offerings, and this step will not only boost domestic and inbound travel but also unlock the sector’s wider economic potential. Tourism already contributes nearly 5% to India’s GDP, and with continued reforms and the rise of new formats, it has the potential to cross 6% in the coming years. The industry also holds immense potential for large-scale job creation and revenue generation. Importantly, new segments like villas, apartments and suites are emerging as powerful drivers of this growth, creating fresh revenue pools and employment opportunities deep inside India, beyond the traditional hotel hubs.

At ELIVAAS, our focus on villas, apartments and suites is aligned with this evolving demand, catering to travellers who value privacy, comfort, and curated experiences. With a simplified GST framework, the guest journey becomes smoother, encouraging greater adoption of such premium yet accessible travel formats.”

Sanat Hooja, Partner, Machan Resorts LLP

The GST Council’s decision to reduce GST on hotel rooms priced up to ₹7,500 from 12% to 5%—effective September 22—is a welcome step, especially for budget and mid-market hotels. This change, coming after eight years, is expected to boost revenues in that segment by 7 to 10 percent.

At our Rajasthan property, The Legacy by Machan, this move will bring positive traction during the off-season, making it more affordable for domestic travelers. However, for most leisure properties—including The Machan, Lonavala—where room tariffs are above ₹7,500, this policy doesn’t bring relief. If India truly wants to attract global tourism and foreign exchange, GST rationalization across all categories is needed.

This is a step in the right direction, but more comprehensive reforms are essential for the hospitality sector to thrive.

Pushpendra Bansal, COO, Lords Hotels & Resorts

We wholeheartedly welcome the government’s decision to reduce GST on hotel rooms priced up to ₹7,500. This progressive move is a win-win for both guests and the hospitality sector. By lowering the GST rate from 12% to 5%, we expect a notable increase in occupancy levels, making quality stays more accessible to a wider audience. This step is anticipated to drive a growth of around 7% –10% in revenues, empowering us to reinvest in elevating our services, upgrading facilities, and delivering an even more exceptional guest experience.

Dr. Sanjay Sethi, MD & CEO, Chalet Hotels Limited

“The recent GST announcements are progressive and in line with the larger vision of nation building and sabka vikas. They will undoubtedly provide a positive impetus to the Indian economy. A big positive for Chalet and the hotel industry in general.

Placing room tariffs below ₹7,500 in the 5% GST slab is a welcome step. At the same time, it is important to address a key concern for the smaller and budget hotels. Simultaneous withdrawal of Input Tax Credit (ITC) creates an unintended anomaly.

To ensure the intent of the reform is fully realised, I would urge three corrective measures:

1. Retain the benefit of ITC for this segment.

2. Revise the tariff threshold upward to ₹12,000, with ITC, in line with current market dynamics.

3. Link future tariff thresholds to the Consumer Price Index (CPI), so that periodic resets are not required.

These changes will make the framework more equitable, growth-friendly, and aligned with the government’s vision for tourism as a driver of inclusive development.”

Sarbendra Sarkar, Founder & MD, Cygnett Hotels and Resorts

"The GST overhaul marks a turning point for India’s hospitality sector. By reducing GST on hotel stays under ₹7,500 to 5%, the government has effectively democratised travel. This will boost domestic tourism, encourage corporate travel to tier-2 and tier-3 cities, and improve occupancy for mid-scale hotels, which form the backbone of our industry. However, luxury hotels remain at 18%, which keeps India aligned with global practices, where premium stays are taxed at a higher rate. The challenge will be balancing this benefit with the loss of input tax credit (ITC), which could compress margins for some operators. Overall, the move signals a clear policy direction, making travel more affordable and inclusive, while still protecting the exclusivity of luxury experiences."

Sumit Mitruka, CEO and founder, Summit Hotels & Resorts

"The reforms announced at the 56th GST Council are far more than a matter of taxation; they represent a structural reset in the way India approaches housing, travel, and consumption. By placing mid-scale hotel accommodation within the 5% bracket, the government has significantly broadened affordability in domestic tourism, ensuring that demand in emerging destinations can flourish. At the same time, the simplification of GST for residential real estate,  through reduced construction costs and clearer slab structures, is poised to stimulate housing supply and bolster confidence, particularly across tier-II and tier-III cities.

Hospitality and real estate are inextricably linked: affordable housing underpins urban growth, whilst accessible travel fuels mobility and commerce. A streamlined GST regime allows these sectors to reinforce one another, creating a powerful multiplier effect on employment, consumption, and investment. The task before industry leaders now is to harness these efficiencies and translate them into greater value not only for guests and homeowners, but for the wider economy."

Perkin Rocha, Founder & CEO, ECKO Hotels & Resorts

We at Ecko Hotels & Resorts applaud the GST Council’s move to reduce the tax rate on hotel rooms priced up to ₹7,500 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.

Neha Kapoor, General Manager, Hyatt Place Gurgaon

We welcome the government’s decision to slash the GST rate to 5% on room tariffs up to ₹7,500. 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.”

Rasmi Ranjan - Director of Operations - Monday Hotels

This is a fantastic step. It's a win-win situation where guests get more value for their money, and we can attract a larger number of travelers. The lower GST will make a significant difference for people planning trips, especially in the budget and mid-market segments. At Monday Hotels, we’re excited about this move as it allows us to offer even more affordable and memorable experiences to our guests, reinforcing our commitment to delivering value without compromising on comfort and service.