Quick Summary
Travellers expecting cheaper hotel stays after the GST rate reduction on rooms under Rs 7,500 on September 22, 2025, have found little relief, according to reports from industry experts and social media users. A tweet by a tax expert highlighted the issue: His usual hotel near the Golden Temple, co
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FAQ :
No, reports indicate that travellers are not experiencing significant price drops on hotel rooms under £7,500 despite the GST rate reduction.
The removal of Input Tax Credit (ITC) for rooms under £7,500 means that Online Travel Agencies (OTAs) and hotels may have to absorb increased GST costs or pass them on, leaving bills largely unchanged.
The FHRAI is concerned that mid-market hotels are facing unrecoverable GST costs on essential inputs, making rooms less affordable and discouraging investment, with examples of significant GST on refurbishment projects.
Tax experts warn that the removal of ITC could lead to higher costs, squeezed margins, and reduced competitiveness, potentially affecting investment and growth in a sector vital to millions of livelihoods.
Proposals include restoring ITC for rooms priced £7,500 or below, allowing hotels to opt for 18% GST with ITC, and clarifying compliance on bundled services. OTAs also want ITC benefits restored to ensure savings reach consumers.
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