EY-FICCI Report Proposes Reduced GST for Premium Hotels to Boost Tourism, ETTravelWorld

Ernst & Young LLP (EY India), in collaboration with the Federation of Indian Chambers of Commerce & Industry (FICCI), has recommended a revised GST structure for hotel accommodation, proposing a reduction in tax on room tariffs above INR 7,500 from 18 per cent to 9 per cent .

The recommendation was made in the report Reimagining Inbound Tourism in India: Trends, Technology & Transformational Opportunities – Towards Incredible India 4.0, released during the three-day Great Indian Travel Bazaar (GITB) 2026 in Jaipur from April 26-28.

The report proposes retaining the existing 5 per cent GST slab for room tariffs between INR 1,000 and INR 7,500 while lowering the higher slab to strengthen India’s price competitiveness against regional tourism markets such as Thailand and Vietnam.

“Higher cost of accommodation, transportation and taxes are the reason India is often perceived as an expensive destination in comparison to countries such as Thailand and Vietnam. India currently levies 5 per cent GST is for room tariffs between INR 1,000 and INR 7,000 and 18 per cent for tariffs above INR 7,500. The 18 per cent tax on higher tariff categories impact overall price competitiveness particularly for international travelers. A reduced GST of 9 per cent for tariffs above INR 7,500 will enhance value perception, improve affordability across segment and better align India with competitive destinations,” said the report.According to the findings, India recorded around 9.9 million foreign tourist arrivals in 2024, remaining below several competing destinations despite strong domestic travel demand. The tourism sector contributes around INR 21 trillion to GDP and supports more than 46 million jobs.

The report noted that India’s hotel development pipeline now exceeds 100,000 rooms, highlighting the need to align future supply growth with stronger international demand to ensure long-term sustainability.

It also identified structural barriers affecting inbound tourism growth, including fragmented state-led branding, limited overseas marketing visibility, lack of experience-led travel packaging, and travel friction linked to connectivity and visa processes.

The study called for a shift from a destination-led model to an integrated experience-driven tourism strategy, positioning India as “a destination with infinite experiences”. It outlined six priority areas – branding, pricing, experience, infrastructure, policy and technology.

It also highlighted high-growth travel segments including sports tourism, culinary travel, spiritual wellness, wildlife tourism and event-led travel. India’s live entertainment sector crossed INR 12,000 crore in 2024 and is projected to grow at around 19 per cent CAGR over the next three years.

The report added that international visitor spending is expected to rise at 5.5 per cent annually to reach USD 2.95 trillion by 2034, presenting a significant opportunity for India if supported by coordinated reforms and competitive pricing.