EY-FICCI Suggest GST Reduction On Luxury Hotels to Make India More Tourist-Friendly

A joint report by EY India and FICCI says that GST on expensive hotel rooms in India should be reduced so that foreign tourists (inbound tourism) can increase. This report was released at the Great Indian Travel Bazaar 2026 held in Jaipur.

The current rule is that hotel rooms priced between Rs 1,000 and Rs 7,500 attract 5% GST, while rooms above Rs 7,500 attract 18% GST. The report suggests that the 5% slab be kept as it is, but the 18% GST be reduced to 9%. This will make expensive hotels look cheaper, and India will become more affordable for foreign travellers.

Why is India considered expensive?

The report said that hotels, transport, and taxes together make travel expensive in India. For this reason, India feels more expensive than countries like Thailand and Vietnam. Especially for foreign tourists, a high tax on premium hotels reduces India’s competitiveness.

Other problems related to tourism

The report also said that there are some other problems in India’s tourism sector, such as the following:

• Different branding of different states
• less promotion in the world
• lack of package tours
• Visa and connectivity problems

Due to these reasons, foreign tourists come less, while domestic tourism is doing well.

India’s tourism and economic contribution

About 9.9 million foreign tourists visited India in 2024. The tourism sector contributes approximately Rs 21 lakh crore to the Indian economy and provides employment to more than 4.6 crore people. Hotel rooms are also increasing rapidly in India, whose number has crossed 1 lakh; hence, it is considered necessary to increase the demand.

In which areas can tourism increase further?

According to the report, there is great potential for tourism growth in these areas in India:

• sports tourism
• Food and Culinary Tourism
• religious journey
• wildlife tourism
• Event and Entertainment Tourism

Changing travel trends and future

The way of travel is changing due to digital platforms, AI tools, and new travellers like Gen Z, women, and solo travellers. Besides, the live entertainment industry is also growing rapidly, and by 2024, it will be worth more than Rs 12,000 crore.

According to the report, international tourism expenditure in the world may reach $2.95 trillion in the coming years. If India does better planning, has fewer taxes, and has proper promotion, then it can be included among the big tourism destinations of the world.