The Hotel Association of India (HAI), the apex body representing the Indian hospitality sector, has welcomed the government’s consideration of rationalising the Goods and Services Tax (GST), announced by Prime Minister Narendra Modi in his Independence Day address. The industry body said the reform could be a game-changer for positioning India as a globally competitive tourism destination and vital to achieving the national goal of attracting 100 million foreign tourists annually by 2047.
HAI stressed that tourism is one of the largest engines of employment and inclusive growth in India, with the potential to contribute up to 10 per cent of GDP if supported by conducive policies. Rationalising GST, the Association said, will be a critical step in unlocking this potential.
Currently, hotel rooms priced up to ₹7,500 per night fall under the 12 per cent GST bracket, a threshold unchanged for nearly seven years. HAI has urged policymakers to revise the tariff slab upwards to ₹15,000 in line with inflation, noting that the existing structure makes Indian hotels less affordable and weakens the country’s global competitiveness.
In its representation to Union Finance Minister Nirmala Sitharaman, who also chairs the GST Council, HAI has recommended a uniform GST rate of 5 per cent with input tax credit across hotels, restaurants, and tourism services. Such a framework, it argued, would ease compliance, reduce costs, stimulate investment, and create jobs, while also bringing India on par with competing destinations like Thailand, Vietnam, and Malaysia, which levy lower tourism taxes.
“GST rationalisation has the potential to transform Indian hospitality into a globally competitive force,” said HAI President Mr. KB Kachru. “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 per cent rate on hotels is too prohibitive, driving up tariffs and putting India’s competitiveness at risk. Broad-based rationalisation is urgently needed to encourage investment, boost productivity, and enhance our contribution to GDP.”
Reiterating its commitment to work with the government, HAI said a fair, simplified, and progressive GST framework will be key to positioning India among the world’s top five tourism destinations by 2047, while simultaneously driving economic growth and job creation.
