Which hotel rooms fall under the new 5% GST slab? How much would you save?

Travellers booking hotel rooms priced up to ₹7,500 a night will now pay a lower Goods and Services Tax (GST) of 5% under the new rate structure approved by the GST Council.

The GST Council on Wednesday cleared sweeping changes to the indirect tax regime, approving an overhaul of rates by limiting slabs to 5% and 18% effective from September 22, the first day of Navaratri.

Earlier, such accommodation attracted 12% GST with ITC. The Council, in its 56th meeting, decided to shift supply of “hotel accommodation” priced at ₹7,500 or less per unit per day to the 5% slab without ITC.

For example: a hotel room costing ₹6,000 per night earlier attracted GST of ₹720 (12%), taking the total to ₹6,720. Under the new rate, GST will be ₹300 (5%), reducing the total payable to ₹6,300.

On the other hand, rooms priced above ₹7,500 remain in the 18% slab with ITC. So, a room costing ₹8,000 a night will attract ₹1,440 as GST, taking the total bill to ₹9,440.

"The... move that will act as a stimulus to the Indian economy by boosting discretionary income and fuelling consumption across sectors. For travel and tourism, the cut in GST on hotel rooms priced below Rs 7,500 will make stays more affordable for a large share of Indian travellers, reinforcing demand in the domestic market," Rajesh Magow, Co-Founder and Group CEO, MakeMyTrip, said.

Nikhil Sharma, Managing Director & COO, South Asia, Radisson Hotel Group, welcomed the GST Council's "progressive step", describing it as a timely and welcome reform that will make quality stays more accessible to a wider base of Indian travellers and strengthen the country's positioning as a high-potential tourism hub.

"By reducing the tax burden on mid-scale and upper mid-scale hotels, the government has unlocked new opportunities for stronger domestic travel, weekend leisure breaks, and business mobility -- factors that are critical to the hospitality sector's growth. This move reflects a deep understanding of industry dynamics and traveller aspirations, and we are confident it will accelerate momentum across the hospitality landscape while reinforcing India's ambition of becoming one of the world’s leading travel destinations," he stated.

Hari Ganapathy, Co-founder of Pickyourtrail, India’s leading international holiday brand, said the government’s move to lower GST on flights and hotels is “more than just a tax revision.”

“When these savings flow through to travellers, the impact is immediate: a family may choose to stay an extra night, a business traveller might upgrade for comfort, and groups could explore new destinations without stretching budgets. Timed with India’s festive calendar and the busy travel months ahead, this step sets the stage for stronger demand both within the country and abroad.”

Here are frequently-asked questions (FAQs) on hotel tariffs:

A: You will pay 5% GST, which is ₹300. Your total bill will be ₹6,300. Earlier, the GST was 12% (₹720), making your bill ₹6,720.

A: Any hotel accommodation priced at ₹7,500 or below per night is taxed at 5% without ITC.

A: Rooms above ₹7,500 attract 18% GST with ITC. For example, on a room priced at ₹8,000 per night, you will pay ₹1,440 as GST, bringing the total bill to ₹9,440.

A: Yes, accommodation below the taxable threshold continues to be exempt from GST.

A: The GST Council reduced the rate from 12% with ITC to 5% without ITC to make domestic travel more affordable and give a boost to the hospitality sector.