GST Cut on Hotel Rooms Below ₹7,500: How Much You Save

The GST Council has simplified India's tax structure, reducing GST on hotel rooms priced at or below ₹7,500 per night from 12% to 5%. This move aims to encourage domestic travel, especially during the festive season, starting from September 22, 2025. Let’s look at which hotel rooms benefit and how much you can save.
Hotel Rooms Priced Up to ₹7,500 Now Under 5% GST Slab
Under the revised system, hotel accommodations priced at ₹7,500 or less per night now fall under the 5% GST slab. Previously, such rooms attracted 12% GST with Input Tax Credit (ITC). However, this new rate structure applies 5% GST without ITC, allowing hotels to pass the benefit directly to guests. For instance, a room booked at ₹6,000 would have earlier cost ₹6,720 including GST. Under the new system, the same room will now cost ₹6,300, resulting in a saving of ₹420 per night.
What Happens to Rooms Above ₹7,500?
Rooms booked above ₹7,500 per night remain under the 18% GST bracket with ITC benefits. For example, a room costing ₹8,000 will attract ₹1,440 as GST, taking the total cost to ₹9,440. This keeps luxury and premium segments taxed at a higher rate, while giving relief to travellers opting for budget and mid-scale options.
Budget Lodges and Guesthouses
Lodgings below the taxable threshold continue to remain exempt from GST altogether. This means many budget inns, homestays and small guesthouses will stay tax-free, benefiting price-conscious travellers further.
Read More: Why Gold Is Taxed At 3% GST Under GST 2.0 When Slabs Are 5% And 18%!
Impact on Tourism and Domestic Travel
This rate cut aligns with the government’s intention to promote domestic tourism. By lowering travel-related costs, particularly during high-demand festive periods, travellers may extend stays or consider better-quality rooms within budget. This change is also expected to benefit the hospitality sector with increased occupancy and revenue volumes.
Conclusion
The GST rate reduction for hotel rooms up to ₹7,500 simplifies travel planning for Indian consumers. While the higher-end stays continue under the 18% tax bracket, budget and mid-range accommodations are now more attractive financially. These reforms are geared towards stimulating demand in India's tourism sector during the festive travel boom.
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Published on: Sep 9, 2025, 11:26 AM IST

Team Angel One
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