Cut GST on premium hotels from 18% to 9%, says EY-FICCI report

An Ernst & Young-FICCI report recommends cutting GST on premium hotel rooms (above Rs 7,500) from 18% to 9%. The goal is to make India more price-competitive with other tourist destinations and boost inbound travel.

GST Reduction Proposed to Boost Tourism

A report by Ernst & Young LLP in collaboration with Federation of Indian Chambers of Commerce & Industry has recommended reducing GST on premium hotel room tariffs above Rs 7,500 from 18 per cent to 9 per cent to improve India's price competitiveness and boost inbound tourism.

The report said the proposed revision, while retaining the 5 per cent GST slab for tariffs between Rs 1,000 and Rs 7,500, is aimed at easing the tax burden, enhancing value perception and aligning India's hospitality pricing with competing global destinations.

According to the report, higher costs of accommodation, transportation and taxes have made India appear relatively expensive compared to countries such as Thailand and Vietnam, particularly for international travellers. It noted that the current 18 per cent GST on higher tariff categories impacts overall price competitiveness and that a reduced rate of 9 per cent could improve affordability and demand.

Report Highlights Broader Tourism Challenges

The recommendations are part of a report titled "Reimagining Inbound Tourism in India: Trends, Technology & Transformational Opportunities - Towards Incredible India 4.0," released during GITB 2026, being held from April 26-28.

The report highlighted structural challenges affecting India's tourism competitiveness, including fragmented state-led branding, limited global marketing outreach, lack of experience-led packaging and ease-of-travel barriers such as connectivity and visa processes.

Sector Overview and Future Growth Drivers

It said India's tourism sector contributes around Rs 21 trillion to GDP and supports over 46 million jobs, while foreign tourist arrivals stood at about 9.9 million in 2024, remaining modest compared to competing destinations. The report also pointed to a strong pipeline of over 1,00,000 hotel rooms, adding that supply growth must align with international demand.

It noted that experience-led segments such as sports, culinary tourism, spiritual wellness, wildlife and event-led travel are emerging as key growth drivers. India's live entertainment sector crossed Rs 12,000 crore in 2024 and is projected to grow at around 19 per cent CAGR over the next three years, the report said.

It added that international visitor spending is expected to grow at 5.5 per cent annually, reaching USD 2.95 trillion by 2034, presenting a major opportunity for India's tourism sector.

The report said India can strengthen its global tourism position through coordinated policy interventions, competitive pricing and a shift towards a unified, experience-driven tourism ecosystem.

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