Just in time for the festive and wedding season, Indian travellers have something to cheer about. The GST Council, in its 56th meeting chaired by Finance Minister Nirmala Sitharaman, has announced a major tax reform that promises to make holidays and air travel more affordable.

Effective from September 22, 2025, the changes include reduced GST rates on hotel stays and airline tickets — a move that’s expected to give a significant boost to domestic tourism.

What’s Changing?

Hotel Rooms:

Rooms priced up to ₹7,500 per night will now attract only 5% GST, down from 12%.

However, businesses won’t be able to claim input tax credit (ITC) on this.

Rooms below ₹1,000 per night remain GST-exempt.

Luxury stays above ₹7,500 will continue to attract 18% GST.

Air Tickets:

Economy class fares will now be taxed at 5% (down from 12%).

Business class tickets, on the other hand, will now attract 18% GST, up from 12%.

The timing couldn’t be better. India is entering its most travel-heavy period — from Durga Puja in the East, Diwali across the country, and the winter wedding season, to the year-end holidays. The reform is expected to encourage more families, solo travellers, and corporate flyers to pack their bags.

Industry Reactions: Optimism with a Touch of Caution

Hari Ganapathy, Co-founder of travel company Pickyourtrail, believes the change will lead to real behavioural shifts:

"A family may stay an extra night, a business traveller might go for a better room, and more people will explore short getaways without overspending."

Rikant Pittie, CEO & Co-founder of EaseMyTrip, called the reform transformative:

"Lowering GST on hotels will push up occupancy rates, especially in the budget and mid-range segments."

Karan Agarwal, Director at Cox & Kings, sees a broader social impact:

"Domestic travel will become more accessible for families and young travellers. This could even drive travel innovation in the budget space."

But Not Everyone’s Cheering

While the move has been widely welcomed, some players have expressed concerns.

Tejas Parulekar, founder of SaffronStays, a luxury homestay chain, appreciates the intent but says more clarity is needed:

"It’s a step in the right direction, but without input tax credits, operators might face increased costs. Also, the term ‘unit’ needs a clear definition — is it per room or per property?"

Manjari Singhal, Chief Growth Officer at Cleartrip, points out that the increase in business class GST could hit high-end travellers:

"A ₹50,000 ticket will now cost around ₹3,000 more. While premium customers won’t mind paying for comfort, it’s still a shift they’ll feel."

Amit Damani, Co-founder of StayVista, sees the move as an early Diwali gift for consumers, but warns of implementation challenges:

"Without clear guidance on accounting and ITC restrictions, operators could be left navigating a grey area."

Overall, the GST cuts are being seen as a big win for travellers and a timely shot in the arm for the tourism and hospitality sectors — though experts agree, the fine print will matter.