GST Rate Adjustment
A significant shift in the Goods and Services Tax (GST) regime is set to provide immediate financial relief for travellers. The change, effective from
the upcoming Monday, impacts hotel rooms priced at ₹7,500 or less. This revision, approved by the GST Council, involves a reduction in the tax rate. Travellers will experience approximately a 7 per cent reduction on room rates, potentially saving up to ₹525 per room per night. This adjustment follows sweeping changes to the indirect tax system, simplifying the structure and aiming for economic advantages. The implementation of the new GST rates from September 22, the initial day of Navaratri, is expected to have a substantial impact on the hospitality sector.
Impact on Travellers
The recent GST adjustments are designed to significantly benefit individuals planning hotel stays, especially those with rooms priced at ₹7,500 or below. This will provide direct savings and enhance the affordability of travel. The reduction in GST on accommodation is anticipated to generate a 7 per cent reduction on room rates, with a maximum saving of ₹525 per room, per night. This alteration also positively affects GST applied to food expenses. This financial relief could motivate increased travel and stimulate demand for lodging across India. This move is considered a step towards providing greater value for travellers.
Industry Perspective
The hospitality industry is showing optimism regarding the effects of the new GST rates. The simplified tax structure is expected to offer much-needed clarity for both hoteliers and travellers. The reduction of GST from 12 per cent to 5 per cent is seen as a vital factor for the sector's growth. Industry insiders believe that these adjustments will bolster revenue and encourage hotels to reinvest. The shift is especially impactful in the mid-market segment, where India's growing middle class is driving a demand for quality, affordable stays. This should unlock greater potential in Tier 2 and Tier 3 cities where value-conscious travellers are becoming more prevalent, further supporting the industry's expansion.
