GST Shake-Up 2025: Why Budget Hotels Win Big, 8 Points

Mumbai

1. GST Council’s September 2025 Decision

   • The Goods and Services Tax (GST) Council slashed tax rates on mid-range hotel rooms starting September 22, 2025.

   • Impact: Big relief for budget and business travellers, while India’s luxury hotels remain taxed at premium rates.

2. Revised GST Rates on Hotel Rooms

   • Up to ₹1,000/night → 0% GST (unchanged).

   • ₹1,001 – ₹7,500/night → Earlier 12%, now 5% GST (without ITC).

   • Above ₹7,500/night → 18% GST (unchanged, applies to luxury hotels and suites).

3. Impact on Budget & Mid-Market Hotels

   • Example: A ₹6,000 hotel stay now attracts only ₹300 GST (5%), instead of ₹720 GST (12%).

   • Mid-market hotels (₹3,000–₹6,500) see the biggest gains, making them more attractive to domestic travellers and business guests.

4. Why Luxury Hotels Remain Untouched

   • Premium hotels like The Oberoi, ITC Maurya, The Leela Palace, and Shangri-La still face 18% GST on rooms above ₹7,500.

   • Example: A ₹20,000/night stay now incurs ₹3,600 GST, keeping luxury travel firmly in the high-tax bracket.

5. Presidential Suites and Elite Stays – The GST Effect

   • The Oberoi, Mumbai – Presidential Suite: ₹1.5 lakh/night → ₹27,000 GST.

   • Shangri-La Eros, New Delhi – Suite: ₹80,000/night → ₹14,400 GST.

   • Had GST risen to 40% (like luxury goods), travellers would pay ₹17,600–₹33,000 extra per night.

   • Current stability in tax rates = good news for ultra-luxury travellers.

6. Hospitality Industry Reactions

   • Industry experts like Lincoln Bennet Rodrigues (Bennet & Bernard, Goa) welcome the GST rationalisation.

   • Expected outcomes: Boost in consumer spending, improved liquidity, and festive season travel demand surge.

7. Two Clear Stories Emerge

   • Budget & Mid-Range Hotels → Clear winners with cheaper tariffs post-GST cut.

   • Luxury Hotels & Presidential Suites → No tax relief, but also no hike, making high-end indulgence stable but premium.

8. What This Means for Travellers

   • Everyday travellers: Lower costs = More frequent holidays and work trips.

   • Luxury travellers: Presidential Suites, royal stays, and five-star indulgence still come with an 18% GST tag, but spared from ultra-luxury taxation.