In GST rate restructuring, bargain for tourism sector

Tourism in India has always been more than leisure — it is a dialogue between civilisations, a carrier of heritage, and a catalyst for inclusive growth.

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Travel has become more affordable for middle-class families and budget travellers.

(SHUTTERSTOCK)

Yet for decades, despite our extraordinary diversity — from Ladakh’s monasteries to Kanyakumari's shores — its full potential remained constrained by fragmented taxation and high costs. The recent reforms in the Goods and Services Tax (GST) have begun to change that story.

For years, India’s tourism and hospitality industry bore the weight of a complicated tax regime. A patchwork of levies — service tax, value-added tax (VAT), luxury tax —created confusion and inflated travel costs. The introduction of GST brought simplification, but the recent rationalisation of rates has been decisive in making Indian tourism more competitive.

The reduction of GST on hotel rooms priced under ₹7,500 from 12% to 5% has been particularly transformative. Travel has become more affordable for middle-class families and budget travellers — the backbone of domestic tourism. Higher occupancy rates, longer stays, and greater local spending are direct outcomes. For small entrepreneurs and homestay owners, lower compliance costs have improved viability and encouraged formalisation. It is a quiet but profound shift towards scale and sustainability.