The government is being urged to lower the Goods and Services Tax (GST) on premium hotel rooms from the current 18% to a more competitive 9%. This recommendation comes from a collaborative report by EY India and FICCI, released this Monday. The aim is to make India a more attractive destination for foreign tourists.
Unveiled at the Great Indian Travel Bazaar 2026 in Jaipur, the report highlights that high costs associated with accommodation, transportation, and taxes make India seem pricier compared to destinations like Thailand and Vietnam. To address this, it suggests maintaining the existing 5% GST for hotel room prices between Rs 1,000 and Rs 7,500, while reducing the rate for premium rooms above Rs 7,500 to just 9%. This change could enhance affordability, improve the overall perception of value, and align India’s hospitality pricing with competing countries.
Titled “Reimagining Inbound Tourism in India: Trends, Technology & Transformational Opportunities – Towards Incredible India 4.0,” the study emphasizes the need for India to shift from a fragmented, destination-focused tourism model to a cohesive, experience-driven ecosystem.
As the report notes, the current high costs are one reason why many view India as an expensive travel destination. With the existing GST framework levying 5% on room tariffs between Rs 1,000 and Rs 7,500, and a higher 18% on those above Rs 7,500, it impacts the price competitiveness, especially for international visitors. A reduction in the GST for these premium categories could significantly enhance the value perception and affordability for travelers.
During the three-day Great Indian Travel Bazaar, scheduled from April 26-28, 2026, the report brought attention to various structural challenges that hold back India’s global tourism potential. Issues like fragmented state-led branding, weak marketing outreach, and barriers related to connectivity and visa processes need to be addressed.
Despite a strong domestic travel market, India is still lagging in attracting foreign tourists, with inbound arrivals projected at about 9.9 million in 2024—modest compared to major competitors. The tourism sector is crucial for India’s economy, contributing approximately Rs 21 lakh crore to the GDP and supporting over 46 million jobs. The report emphasizes that with over 1 lakh rooms in the hospitality pipeline, generating demand is essential for sustainable growth.
It also points out emerging opportunities in high-value areas such as sports tourism, culinary experiences, wellness retreats, wildlife adventures, and event-based tourism. The live entertainment industry alone has surpassed Rs 12,000 crore and is expected to grow at a remarkable 19% annually over the next three years, providing exciting opportunities for inbound travel.
Furthermore, the report discusses how artificial intelligence and digital platforms are transforming travel discovery, alongside the evolving preferences of Gen Z travelers, women travelers, and solo adventurers.
Looking to the future, international visitor spending is anticipated to increase by 5.5% annually, reaching a staggering $2.95 trillion by 2034. This presents a remarkable opportunity for India. By enacting coordinated policy reforms, offering competitive pricing, and adopting a stronger experience-led tourism strategy, India can leverage its cultural richness and diverse attractions to solidify its position as a leader in global tourism.
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