Budget Needs to Rationalize Taxes for Hospitality Sector

Reducing GST, grant of infrastructure status key to reviving the sector, says industry leader

- Varuni Khosla

The hotel industry is banking on the Union Budget 2025-26 for reforms that could lower stay and dining costs, making travel more affordable for consumers.

The industry is advocating for a reduction in goods and services tax (GST) rates for hotel rooms and restaurants, besides tax incentives, to boost sector viability, K.B. Kachru, Hotel Association of India president and chairman emeritus, and principal advisor for Radisson Hotel Group in South Asia told Mint.

These changes could lower operating costs for hotels, improve affordability for travellers, and help attract more international visitors.

With the sector facing high costs and regulatory hurdles, he said such measures will also attract more investment, create jobs, and contribute to India's long-term economic growth.

Simplifying GST for hotels and restaurants and lowering GST rate for meetings, incentives, conferences, and exhibitions for international tourists will help make the sector more competitive and viable for foreign visitors.

"We suggest lowering the 18% GST on hotel rooms priced above ₹7,500 to 12%, bringing it in line with other Asian countries.