EY, FICCI urge govt to reduce GST rate to 9% on hotel rooms priced above Rs 7,500 per night

EY India and FICCI, in a report, have urged the government to consider reducing the goods and services tax (GST) on hotel rooms priced above Rs 7,500 to 9%, while retaining the existing 5% slab for tariffs between Rs 1,000 and Rs 7,500. Currently, GST is levied at a 5% rate for hotel rooms costing less than Rs 7,500 per night and an 18% rate for rooms costing more than Rs 7,500 per night.

The report said that the higher cost of accommodation, transportation, and taxes are some of the reasons India is often perceived as an expensive tourist destination in comparison to countries such as Thailand and Vietnam.

The report, titled ‘Reimagining Inbound Tourism in India: Trends, Technology & Transformational Opportunities – Towards Incredible India 4.0’, also said that the 18% tax on higher tariff categories impacts overall price competitiveness, particularly for international travellers.


The report advocated that a reduced GST of 9% for tariffs above Rs 7,500 can enhance value perception, improve affordability across segments and better align India with competitive destinations

The report also identifies key structural challenges constraining India's global competitiveness which is fragmented state-led branding, limited global marketing outreach, lack of experience-led packaging, and ease-of-travel barriers including connectivity and visa processes.

The report presents a comprehensive and forward-looking roadmap to unlock India's inbound tourism potential, advocating a decisive shift from a fragmented, destination-led approach to a unified, experience-driven tourism ecosystem.

Also read: Tourism Boost: GST on hotel room tariffs under ₹7,500 cut to 5%

Indian tourism potential and roadblocks

According to the report, India's tourism landscape reflects a striking paradox—strong domestic demand yet a persistent inbound gap, with foreign tourist arrivals at approximately 9.9 million in 2024, modest against competing destinations.

The tourism sector currently contributes nearly Rs 21 lakh crore to India’s gross domestic product (GDP) and supports over 46 million jobs. With a hospitality pipeline exceeding 1 lakh rooms, the report notes that supply growth must align with international demand to ensure sustainability.

According to the report, India’s tourism landscape is undergoing a powerful transformation, with experience-led and high-value segments emerging as the next big growth frontier. From sports and culinary tourism to spiritual wellness, wildlife, and event-led travel, India’s diverse offerings are increasingly capturing global imagination.

The report also said that India’s live entertainment sector surpassed Rs 12,000 crore ($1.28 billion) in 2024, projected to grow at a CAGR of 19% over three years, making festivals, concerts, and sporting events powerful inbound drivers. AI and digital platforms are redefining travel discovery, while the rise of Gen Z, women, and solo travellers signals a fundamental shift in traveller profile that India must be equipped to serve.

India stands at a pivotal moment in its tourism journey, and enhancing price competitiveness is central to unlocking its true potential on the global stage. By addressing cost dynamics around accommodation, taxation, and transport, India can position itself as a compelling value destination against its Southeast Asian counterparts. International visitor spending, projected to grow at 5.5% per annum to reach $2.95 trillion by 2034, represents the most compelling growth opportunity ahead.