Will Flights And Hotels Get Cheaper Now? How Revised GST Rates Impact Travel

In a key decision aimed at easing expenses for travellers, the Goods and Services Tax (GST) Council approved significant changes to tax rates on hotels and air travel during its 56th meeting on September 3, 2025, in New Delhi. Chaired by Finance Minister Nirmala Sitharaman, the move comes just ahead of the festive and wedding season, a time of high consumer spending on travel and hospitality. The revised GST rates will take effect from September 22, 2025, and travellers can expect lower spending on flight and hotel bookings.

Also Read: Revised GST For Food: Complete List Of Foods That Will Get Cheaper And Costlier Starting September 22

Lower GST On Hotels

One of the most significant changes is the reduction in GST on hotel stays. Earlier, rooms priced up to Rs 7,500 per night were taxed at 12% with input tax credit (ITC). Under the revised rates, these rooms will now fall under a 5% GST slab without ITC.

What Changed And What Remained The Same:

• Rooms priced below Rs 1,000 per night will remain GST-free.
• Rooms between Rs 1,000 and Rs 7,500 per night will now attract a 5% GST rate, down from 12%.
• Premium hotels with tariffs above Rs 7,500 will continue to attract 18%.

This change is expected to reduce costs for a wide range of travellers.

Also Read: GST Rates On Food Revised: Key FAQs Answered By Finance Ministry

Hotel bookings are set to be cheaper.

Cheaper Flights Ahead

Air travel will also benefit from lower taxes. Economy class tickets will now attract 5% GST, down from 12%. Business class tickets will be taxed at 12%, compared to 18% earlier. The move is aimed at making air travel more affordable and easing costs for business travellers, which may also push demand for flights.

Boost For Tourism And Hospitality

The revised GST rates are expected to support growth in the services sector, particularly tourism and hospitality, which were among the worst hit during the pandemic. Lower taxes on hotels and flights are likely to improve consumer sentiment, making travel more attractive and affordable.

With tax rates on hotels and flights coming down, both stays and air travel are set to get cheaper, encouraging more travel and celebrations in the months to come.