GST Rate Cut on Hotel Bookings – Cheaper Stays Across India from September 22, 2025

Sep 20, 2025

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The Indian government has announced a significant reduction in GST rates on hotel bookings, effective from September 22, 2025. This move is aimed at making travel and accommodation more affordable for domestic travelers and boosting occupancy rates in hotels, especially in the mid-range segment.

Hotels priced between ₹1,000 and ₹7,500 per night will now attract a 5% GST, down from 12%, while luxury hotels priced above ₹7,500 per night continue to attract 18% GST. Budget hotels under ₹1,000 remain exempt from GST.

This reform is expected to encourage domestic tourism, reduce travel costs for middle-class families, and increase bookings for hotels across India.

New GST Slabs for Hotel Bookings

The revised GST rates for hotel rooms are structured to make accommodations more affordable across all price segments.

Room Price per Night	Previous GST	New GST	Impact
Below ₹1,000	0%	0%	No change, budget stays remain tax-free
₹1,000 – ₹7,500	12%	5%	Significant cost reduction for mid-range stays
Above ₹7,500	18%	18%	Luxury hotel rates remain unchanged

The reduction in GST for mid-range hotels is the most impactful, as it caters to the majority of domestic travelers, including families and business travelers.

Benefits of GST Reduction for Travelers

Lower Accommodation Costs:
Travelers booking hotels in the ₹1,000 to ₹7,500 range will see a noticeable drop in total booking costs, making domestic travel more affordable.
Boost for Domestic Tourism:
Reduced accommodation costs encourage more domestic trips, benefiting hotels, restaurants, and local businesses.
Increased Hotel Occupancy:
Hotels in mid-range segments can expect higher bookings due to the more attractive pricing after GST reduction.
Flexible Options for Families and Groups:
With lower GST, families and group travelers can book comfortable mid-range hotels without stretching their budgets.

Estimated Savings Example

To give travelers a better idea, here is an example of how GST reduction affects booking costs:

Room Price	Previous GST Amount	New GST Amount	Total Savings
₹1,500	₹180	₹75	₹105
₹3,000	₹360	₹150	₹210
₹5,000	₹600	₹250	₹350
₹7,500	₹900	₹375	₹525

As seen, the savings can be substantial for longer stays or for multiple rooms booked.

Impact on Hotel Categories

Hotel Category	Typical Price Range	Previous GST	New GST	Traveler Advantage
Budget Hotels	Below ₹1,000	0%	0%	No change; stays remain affordable
Mid-Range Hotels	₹1,000 – ₹7,500	12%	5%	Lower booking cost; more travelers can afford
Luxury Hotels	Above ₹7,500	18%	18%	No change; premium travelers unaffected

The mid-range hotel segment benefits the most, which is where a large portion of domestic tourism is concentrated.

Tips for Travelers

Book Early: Take advantage of reduced GST rates by planning and booking trips ahead of peak seasons.
Compare Hotels: Check mid-range hotels for value-added services, as the reduced GST makes previously expensive options more attractive.
Look for Deals: Some hotels may combine the GST reduction with special offers to attract bookings.
Plan Longer Stays: Savings accumulate for longer stays, making multi-day trips more cost-effective.

Economic Implications

Boost to Hospitality Industry: The GST reduction is likely to increase hotel occupancy rates and overall revenue in the mid-range segment.
Support for Local Economies: Domestic travelers spending less on accommodation can redirect savings toward dining, sightseeing, and shopping.
Enhanced Travel Affordability: Families and middle-class travelers will find travel more financially manageable, encouraging domestic tourism growth.

Summary

The GST reduction on hotel bookings effective September 22, 2025, is a major step toward making travel and accommodation more affordable for Indian travelers. By lowering the GST from 12% to 5% on mid-range hotels, the government is providing direct relief to travelers while supporting the hospitality sector.

Whether you are planning a short weekend getaway, a business trip, or an extended vacation, this change allows you to save on accommodation costs without compromising on comfort.

Travelers can now explore more destinations, enjoy better stays, and take advantage of the reduced tax rates to plan trips that were previously considered expensive.

Disclaimer: This article is for informational purposes only. GST rates and hotel pricing are subject to change. Please verify all details with hotels or booking platforms before making reservations.