Fiscal policy boost to Tourism and Hospitality
|
Gyan Bhushan and Dr Pratik Ghosh
Tourism in India has always been more than sightseeing : it’s a dialogue between cultures, a bridge between regions, and for millions, a path to livelihood. Yet for decades, the industry carried the burden of fragmented taxes, high costs, and uneven growth. The recent Goods and Services Tax (GST) restruc- turing, however, is helping rewrite that story.
With lower rates on hotels, transport, and cultural goods, India’s tourism and hospitality sector has gained a major fillip for growth. More importantly, it has empowered the common traveller, putting more money back into their pockets and making leisure, business, and medical travel more affordable than ever.
Simpler Taxes, Stronger Travel Economy
For years, travel operators, hoteliers, and transport providers juggled multiple taxes, such as, service tax, VAT, and luxury tax ; all varying across states. The advent of GST in 2017 brought some clarity, but the 2025 restructuring has gone further, turning simplification into stimulus.
The reduction of GST on hotel rooms priced under ?7,500 from 12% to 5% is proving transformative. As highlighted in an article in a leading newspaper, this move has made travel noticeably cheaper for middle- class families and budget travellers, the backbone of India’s domestic tourism. Moreover, this will augur very well for inbound tourists as well, as these costs now become more competitive with peer countries.
Hotels and homestays are reporting higher occupancy, longer stays, and more local spending. For smaller entrepreneurs and homestay owners, lower compliance costs and a unified tax framework have improved business viability and encouraged formalisation which is a quiet but powerful shift toward scale and sustainability.
Affordable Mobility: A Driver of Inclusion
Tourism thrives on connectivity. That’s why the cut in GST on passenger transport, especially buses with more than 10 seats, from 28% to 18%, is another game changer. This explains how this move has made intercity and group travel more accessible for pilgrims, students, and families. From religious circuits to eco-tourism parks and rural getaways, affordable mobility has democratised travel and revived local economies.
In a country where tourism acts as a vehicle for regional equity, every bus fare saved becomes a tool of empowerment. Cheaper and cleaner transport options not only expand access but also align with India’s sustainability goals by encouraging shared travel over private vehicles.
Cultural Investments: Empowering the Hand that Crafts
(To be contd)
Tourism in India has always been more than sightseeing : it’s a dialogue between cultures, a bridge between regions, and for millions, a path to livelihood. Yet for decades, the industry carried the burden of fragmented taxes, high costs, and uneven growth. The recent Goods and Services Tax (GST) restruc- turing, however, is helping rewrite that story.
With lower rates on hotels, transport, and cultural goods, India’s tourism and hospitality sector has gained a major fillip for growth. More importantly, it has empowered the common traveller, putting more money back into their pockets and making leisure, business, and medical travel more affordable than ever.
Simpler Taxes, Stronger Travel Economy
For years, travel operators, hoteliers, and transport providers juggled multiple taxes, such as, service tax, VAT, and luxury tax ; all varying across states. The advent of GST in 2017 brought some clarity, but the 2025 restructuring has gone further, turning simplification into stimulus.
The reduction of GST on hotel rooms priced under ?7,500 from 12% to 5% is proving transformative. As highlighted in an article in a leading newspaper, this move has made travel noticeably cheaper for middle- class families and budget travellers, the backbone of India’s domestic tourism. Moreover, this will augur very well for inbound tourists as well, as these costs now become more competitive with peer countries.
Hotels and homestays are reporting higher occupancy, longer stays, and more local spending. For smaller entrepreneurs and homestay owners, lower compliance costs and a unified tax framework have improved business viability and encouraged formalisation which is a quiet but powerful shift toward scale and sustainability.
Affordable Mobility: A Driver of Inclusion
Tourism thrives on connectivity. That’s why the cut in GST on passenger transport, especially buses with more than 10 seats, from 28% to 18%, is another game changer. This explains how this move has made intercity and group travel more accessible for pilgrims, students, and families. From religious circuits to eco-tourism parks and rural getaways, affordable mobility has democratised travel and revived local economies.
In a country where tourism acts as a vehicle for regional equity, every bus fare saved becomes a tool of empowerment. Cheaper and cleaner transport options not only expand access but also align with India’s sustainability goals by encouraging shared travel over private vehicles.
Cultural Investments: Empowering the Hand that Crafts
(To be contd)