India’s hospitality sector has undergone a major tax restructuring with the government’s decision to reduce GST on hotel rooms priced up to ₹7,500 to just 5%. This bold move is part of the broader GST rationalization intended to stimulate domestic tourism, make hotel stays more affordable, and bring greater clarity to the tax framework.
Before this reform, hotel rooms within the same tariff range attracted 12% GST with Input Tax Credit (ITC). Under the new structure, these rooms now fall under the 5% GST slab without ITC, making hotel stays cheaper for guests while altering cost structures for hoteliers.
This comprehensive guide explains the new GST structure, its benefits and challenges, the impact on different hotel segments, traveler advantages, pricing effects, hotel profitability, and how hotels can adapt strategically.

Understanding the New GST Structure for Hotels
To simplify how the new GST rates apply, here is the updated breakdown:
Updated GST Rates for Hotel Rooms in India
Room Tariff (per night)Applicable GST RateEligible for ITC?Who It Applies ToUp to ₹7,5005% GSTNo ITCBudget & mid-range hotelsAbove ₹7,50018% GSTITC availableLuxury & star hotels
https://saasaro.com/blog/hotel....-room-gst-reduced-to

India’s hospitality sector has undergone a major tax restructuring with the government’s decision to reduce GST on hotel rooms priced up to ₹7,500 to just 5%. This bold move is part of the broader GST rationalization intended to stimulate domestic tourism, make hotel stays more affordable, and bring greater clarity to the tax framework.
Before this reform, hotel rooms within the same tariff range attracted 12% GST with Input Tax Credit (ITC). Under the new structure, these rooms now fall under the 5% GST slab without ITC, making hotel stays cheaper for guests while altering cost structures for hoteliers.
This comprehensive guide explains the new GST structure, its benefits and challenges, the impact on different hotel segments, traveler advantages, pricing effects, hotel profitability, and how hotels can adapt strategically.

Understanding the New GST Structure for Hotels
To simplify how the new GST rates apply, here is the updated breakdown:
Updated GST Rates for Hotel Rooms in India
Room Tariff (per night)Applicable GST RateEligible for ITC?Who It Applies ToUp to ₹7,5005% GSTNo ITCBudget & mid-range hotelsAbove ₹7,50018% GSTITC availableLuxury & star hotels
https://saasaro.com/blog/hotel....-room-gst-reduced-to

What is a Revenue Management System and Why Hotels Need It?

A Revenue Management System (RMS) is a smart hotel technology tool that uses data, automation, and analytics to help hotels set the right price at the right time. It analyzes market demand, competitor pricing, booking trends, and occupancy forecasts to recommend the most profitable room rates. Hotels use RMS software to improve hotel revenue management, optimize pricing, and boost overall profitability.

Hotels need a Revenue Management System because the hospitality industry is highly competitive and demand changes quickly. An RMS enables dynamic pricing, smarter decision-making, and accurate demand forecasting. It helps hotels increase RevPAR, maintain rate parity across OTAs, attract more direct bookings, and reduce manual errors. Whether it’s a boutique hotel, budget hotel, or luxury property, an RMS ensures better revenue results and operational efficiency.

By adopting a hotel revenue management system, hoteliers can stay ahead of competitors, improve distribution strategy, and maximize revenue all year round.https://saasaro.com/blog/what-....is-a-revenue-managem

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