The Hotel Association of India (HAI) has welcomed the Prime Minister’s announcement on August 15 regarding the consideration of GST rationalization. The apex body emphasized that such reforms are vital for positioning India as a prime global tourism destination and achieving the ambitious target of attracting 100 million foreign tourists annually by 2047.
HAI highlighted tourism’s proven role in driving employment and inclusive economic growth, stating that—given the right policy support—the sector could contribute significantly toward meeting the goal of tourism accounting for 10% of India’s GDP.
Currently, hotel rooms priced up to ₹7,500 per day fall under the 12% GST bracket—a threshold set six to seven years ago. HAI has urged policymakers to review this slab in light of inflation and proposed increasing the threshold to ₹15,000 per night to improve traveler affordability and enhance India’s competitiveness as a tourism hub.
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In its representation to Finance Minister Nirmala Sitharaman, who chairs the GST Council, HAI recommended a uniform 5% GST rate with input tax credit (ITC) across hotels, restaurants, and tourism services. The Association underscored that such simplification would ease compliance, improve ease of doing business, and spur investment and job creation in the hospitality sector.
Commenting on the announcement, HAI President K.B. Kachru said:
GST rationalisation has the potential to transform Indian hospitality into a globally competitive force. While we welcome the Council’s consideration of a simplified structure, it is equally critical to align tariff thresholds with inflation and global benchmarks. The current 18% tax is too prohibitive, increasing hotel tariffs and putting India’s competitiveness at risk. A broad rationalisation is needed to encourage productivity, investment, and economic contribution from the sector.
HAI reaffirmed its commitment to collaborating with the government toward establishing a fair and progressive GST framework that supports growth, stimulates investment, and solidifies India’s emergence as a leading tourism destination.
