-KH News Desk (editorial1@imaws.org)
A joint report by EY and FICCI has urged the Indian government to slash the Goods and Services Tax (GST) on premium hotel rooms from the current 18% to 9%. The report, released on April 28, 2026, argues that the high tax burden on luxury stays hinders India’s ability to compete with other global tourism hubs in Southeast Asia and the Middle East.
The whitepaper highlights that the current tax structure places Indian luxury hotels among the highest-taxed in the world, often deterring high-spending international travelers and large-scale MICE (Meetings, Incentives, Conferences, and Exhibitions) events.
Key Recommendations from the EY-FICCI Report:
Uniform GST Rate: The report proposes a flat 9% GST rate for all hotel rooms with a tariff exceeding ₹7,500, aligning premium stays with the mid-market segment.
Infrastructure Status: A critical demand is for the government to grant “Infrastructure Status” to all hotel projects regardless of investment size, allowing developers access to lower-interest loans and longer repayment periods.
Input Tax Credit (ITC): The industry seeks a simplified mechanism for claiming Input Tax Credit on capital goods used in hotel construction and renovations to encourage reinvestment.
Ease of Doing Business: The report calls for a centralized, “Single Window Clearance” system for hotel licenses to reduce the administrative burden on new developments.
Economic Rationale: The hospitality sector is a significant driver of employment and foreign exchange. EY analysts suggest that the revenue loss from a lower GST rate would be offset by increased occupancy levels and higher spending on ancillary services like F&B and wellness.
A spokesperson from FICCI’s Tourism Committee stated: “To position India as a premier global destination, our fiscal policies must reflect the reality of international competition. Reducing the tax burden is not just about helping hotels; it’s about making the entire Indian tourism ecosystem more attractive to the world”.
