New Delhi, Sep 6: In a major move to make travel more affordable and boost domestic tourism, the Government of India has announced significant reductions in Goods and Services Tax (GST) rates on budget hotels and economy-class air travel for the financial year 2025.

The decision was finalized during the 56th GST Council meeting chaired by Finance Minister Nirmala Sitharaman.

Under the revised structure, hotel rooms priced below ₹7,500 per night will now attract only 5% GST, down from the earlier 12%. This change is expected to benefit middle-class travellers and families who rely on budget accommodations for vacations and business trips.

Similarly, economy-class flight tickets will now be taxed at 5% GST instead of 12%, making both domestic and international air travel more accessible. Business-class fares have also seen a reduction, now taxed at 12% instead of 18%.

These reforms are part of a broader strategy to stimulate India’s tourism sector, which is projected to grow by 15% in 2025. Industry experts believe this will lead to increased travel demand, higher hotel occupancy rates, and new employment opportunities in hospitality and aviation.

The revised GST rates will come into effect from September 22, 2025, just ahead of the festive and wedding season, a peak time for travel and spending.

With simplified tax slabs and reduced costs, India aims to position itself as a more attractive destination for both domestic and international tourists.