GST rationalisation for hotels, restaurants can boost tourism: SOTC CEO

The GST Council had last year reduced GST on hotel rooms with tariffs of up to ₹7,500 per night to 5% from 12%, without input tax credit, to make accommodation more affordable and support tourism

Further rationalisation in goods and services tax (GST) on domestic hotels and restaurants could help fuel tourism growth in India, even as the country's travel market continues to grow despite global uncertainties, according to SOTC Travel Managing Director and CEO Vishal Suri.

The GST Council had last year reduced GST on hotel rooms with tariffs of up to ₹7,500 per night to 5 per cent from 12 per cent, without input tax credit, to make accommodation more affordable and support tourism. The new rates came into effect from September 22 last year.

Suri said the government's decision to reduce the tax collected at source (TCS) on overseas tour packages to a uniform 2 per cent was a positive step for the industry.

"The government has already reduced TCS on overseas tour packages to 2 per cent (uniform rate) and can further consider GST rationalisation on domestic hotels & restaurants," Suri told PTI in an interview.

He said tourism has the potential to emerge as a major contributor to India's economic growth, employment generation and regional development, and called for continued investment in tourism infrastructure, improved last-mile connectivity, destination development and policy measures that simplify regulations and encourage investment.

The MD-CEO of the travel service provider said India's domestic tourism story remains underpinned by strong structural fundamentals, supported by improving infrastructure, expanding airport networks, better road and rail connectivity, and government investments that are making travel more accessible across the country.

On the impact of higher airfares, he said travellers have become more value-conscious rather than cutting back on travel.

"Higher airfares have certainly made customers more value-conscious, but rather than reducing travel, they are adapting through earlier bookings, flexible travel dates and destination choices that offer better overall value," he said, adding that consumers are increasingly evaluating the overall holiday experience instead of focusing solely on airfare.

Thailand, Vietnam, Bali, Japan, Singapore, Switzerland, France, Australia, and New Zealand continue to remain among the preferred outbound destinations for Indian travellers, while demand is also rising for premium, experience-led holidays such as luxury rail journeys, cruises, wildlife safaris, and seasonal travel experiences.

He said domestic tourism has witnessed increased interest, particularly for spiritual travel across India.

Suri said SOTC Travel will continue to expand its omni-channel presence over the next 2-3 years through a mix of company-owned stores and franchise outlets, with Tier-II and Tier-III cities expected to remain key growth markets.

Rising disposable incomes, improving air connectivity, increasing passport penetration and greater digital adoption are driving demand from smaller cities, he said.

Looking ahead, Suri said the company remains cautiously optimistic about the rest of FY27, citing rising disposable incomes, improving connectivity, growing travel aspirations and a diversified business model as key factors supporting future growth.