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GST Cut to 9% on Premium Hotels Proposed to Boost India Tourism

A joint report by EY and FICCI recommends reducing GST on premium hotel room tariffs above Rs 7,500 from 18% to 9% to boost inbound tourism. The report notes that higher costs make India seem expensive compared to Thailand and Vietnam, impacting international traveler demand. India's tourism sector contributes Rs 21 trillion to GDP and supports over 46 million jobs, but foreign tourist arrivals stood at only 9.9 million in 2024. The report calls for coordinated policy interventions, competitive pricing, and a shift towards an experience-driven tourism ecosystem to strengthen India's global position.

Key Points: GST Cut to 9% on Premium Hotels to Boost Inbound Tourism

  • GST on premium hotel rooms (above Rs 7,500) proposed to be cut from 18% to 9%
  • Aim to improve India's price competitiveness for international travelers
  • India's foreign tourist arrivals at 9.9 million in 2024, modest vs peers
  • Report suggests unified, experience-driven tourism ecosystem with policy interventions
2 min read

EY-FICCI report pitches GST cut to 9% on premium hotel stays to boost inbound tourism

EY-FICCI report recommends reducing GST on premium hotel stays from 18% to 9% to improve price competitiveness and attract international travelers to India.

"Higher costs of accommodation, transportation and taxes have made India appear relatively expensive compared to countries such as Thailand and Vietnam. - EY-FICCI Report"

New Delhi, April 27

A report by Ernst & Young LLP in collaboration with Federation of Indian Chambers of Commerce & Industry has recommended reducing GST on premium hotel room tariffs above Rs 7,500 from 18 per cent to 9 per cent to improve India's price competitiveness and boost inbound tourism.

The report said the proposed revision, while retaining the 5 per cent GST slab for tariffs between Rs 1,000 and Rs 7,500, is aimed at easing the tax burden, enhancing value perception and aligning India's hospitality pricing with competing global destinations.

According to the report, higher costs of accommodation, transportation and taxes have made India appear relatively expensive compared to countries such as Thailand and Vietnam, particularly for international travellers.

It noted that the current 18 per cent GST on higher tariff categories impacts overall price competitiveness and that a reduced rate of 9 per cent could improve affordability and demand.

The recommendations are part of a report titled "Reimagining Inbound Tourism in India: Trends, Technology & Transformational Opportunities - Towards Incredible India 4.0," released during GITB 2026, being held from April 26-28.

The report highlighted structural challenges affecting India's tourism competitiveness, including fragmented state-led branding, limited global marketing outreach, lack of experience-led packaging and ease-of-travel barriers such as connectivity and visa processes.

It said India's tourism sector contributes around Rs 21 trillion to GDP and supports over 46 million jobs, while foreign tourist arrivals stood at about 9.9 million in 2024, remaining modest compared to competing destinations.

The report also pointed to a strong pipeline of over 1,00,000 hotel rooms, adding that supply growth must align with international demand.

It noted that experience-led segments such as sports, culinary tourism, spiritual wellness, wildlife and event-led travel are emerging as key growth drivers.

India's live entertainment sector crossed Rs 12,000 crore in 2024 and is projected to grow at around 19 per cent CAGR over the next three years, the report said.

It added that international visitor spending is expected to grow at 5.5 per cent annually, reaching USD 2.95 trillion by 2034, presenting a major opportunity for India's tourism sector.

The report said India can strengthen its global tourism position through coordinated policy interventions, competitive pricing and a shift towards a unified, experience-driven tourism ecosystem.

- ANI

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Reader Comments

P
Priya S
I understand the logic, but why always cut taxes for premium services? What about the middle-class families who can barely afford a hotel stay? The 5% slab for rooms below ₹7,500 is okay, but maybe they should consider reducing GST on mid-range hotels too. Also, the report mentions fragmented state branding - absolutely true! Each state promotes itself individually, but foreign tourists need a unified experience. 😌
J
James A
Interesting recommendation from EY-FICCI. I've traveled to both India and Thailand, and the price difference is noticeable. But it's not just GST - visa processes, connectivity, and safety perceptions also matter. India has incredible diversity, from the Himalayas to Kerala backwaters, but marketing needs to improve. The report mentions "experience-led tourism" like culinary and wellness - that's where India can truly shine. Hope this gets implemented soon! ✈️
R
Rohit P
Great idea, but I'm skeptical about the implementation. The government already faces revenue shortfalls, and cutting GST might not automatically translate to lower prices for tourists. Hotels might just pocket the difference. Also, what about domestic tourism? We Indians also want to enjoy premium hotels without breaking the bank. The 9% reduction should ideally apply to domestic tourists too, not just inbound ones. Just my two paise! 🏨
S
Sarah B
As a frequent traveler to India for work, I can confirm that accommodation costs are a deterrent. I often choose business hotels in the ₹5,000-7,000 range to avoid the high GST. The report's suggestion to cut GST on premium stays makes sense - it could help India compete with Dubai and Bangkok for MICE tourism. The fact that India's live entertainment sector is growing at 19% CAGR is promising. Let's hope this is just the beginning of broader tourism reforms. 🇮🇳🌏

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