**New Delhi: Hotel Industry Seeks Union Budget 2025-26 Reforms to Lower Travel Costs**
The hotel sector is looking to the Union Budget 2025-26 for reforms aimed at reducing accommodation and dining expenses, thereby making travel more accessible for consumers. K.B. Kachru, President of the Hotel Association of India and Chairman Emeritus and Principal Advisor for Radisson Hotel Group in South Asia, emphasized the industry’s push for a reduction in Goods and Services Tax (GST) rates for hotel rooms and restaurants, along with tax incentives to enhance the sector’s viability.
These proposed changes could decrease operating costs for hotels, enhance affordability for travelers, and attract a greater number of international visitors. Kachru noted that the industry is currently grappling with high costs and regulatory challenges, and that such reforms would also stimulate investment, create jobs, and contribute to India’s long-term economic growth.
To make the sector more competitive for foreign visitors, the industry advocates for simplifying GST for hotels and restaurants, as well as lowering the GST rate for meetings, incentives, conferences, and exhibitions aimed at international tourists. “We propose reducing the 18% GST on hotel rooms priced above ₹7,500 to 12%, aligning it with rates in other Asian countries. Furthermore, we recommend lowering the GST for hotel restaurants to 12% with full input tax credit (ITC), making them more competitive compared to standalone restaurants that currently face a 5% GST rate without ITC,” Kachru stated.
He also highlighted the necessity of rationalizing taxes for Indian consumers. “Countries like Thailand, Singapore, and Sri Lanka are gaining an edge over us as they target the same travel budgets of Indians, who also spend money domestically,” he added.
Kachru pointed out that Indian hotels are facing escalating costs and that a reassessment of the taxes imposed on them is essential. “India is at a disadvantage when it comes to hosting large-scale events, including weddings and corporate meetings,” he remarked.
The association has been advocating for infrastructure status for hotels for several years, but has yet to see the associated benefits. Currently, hotels can only qualify for infrastructure status if they meet specific criteria related to scale and cost. If these criteria are revised, developers would gain access to improved project financing, easier bank loans, reduced development costs, and various tax incentives. Additionally, updating the Reserve Bank of India’s harmonized master list of infrastructure sectors to include hotels would ensure consistency across financial regulations and policies, thereby encouraging investment in hotel room development, which is vital for the country’s tourism infrastructure.