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In a significant choice to reduce costs for travelers, the Goods and Services Tax (GST) Council approved important changes to tax rates on hotels and flights during its 56th meeting on September 3, 2025, in New Delhi. The meeting was led by Finance Minister Nirmala Sitharaman, and this decision comes right before the busy festive and wedding season, a period known for increased spending on travel and accommodation. The new GST rates will go into effect on September 22, 2025, allowing travelers to anticipate lower expenses for flights and hotel accommodations. A major alteration is the decrease in GST for hotel stays. Previously, rooms costing up to Rs 7,500 each night had a 12% tax including input tax credit (ITC). With the new rates, these same rooms will now have a 5% GST rate without ITC.

The Council has also modified the GST for hotels based on their pricing categories:

Rooms priced under Rs 1,000 per night will still not have any GST.
High-end hotels with prices over Rs 7,500 will keep an 18% tax rate.

This adjustment is likely to lead to lower expenses for many travelers. Airline travel will also see reduced taxation. Economy class flight tickets will now have a 5% GST instead of 12%. Business class tickets will be taxed at 12%, reduced from 18% previously. The intent is to make flying more budget-friendly and lessen costs for business passengers, which might also increase flight demand. The updated GST rates are anticipated to promote growth in the service industry, especially in tourism and hospitality, sectors severely affected by the pandemic. With lower taxes on accommodations and flights, consumer confidence is likely to improve, making travel more appealing and affordable.