A joint report by EY India and FICCI has proposed a significant tax overhaul to bolster inbound tourism, recommending that the GST on high-end hotel rooms be slashed by half.
The report suggests reducing the current 18 per cent GST on rooms priced above ₹7,500 to 9 per cent, while maintaining the 5 per cent slab for mid-range accommodations. This targeted intervention aims to align India’s hospitality pricing with global competitors and is projected to help international visitor spending reach $2.95 billion over the next eight years.
It argued that 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. “A reduced GST of 9 per cent for tariffs above ₹7,500 will enhance value perception, improve affordability across segment and better align India with competitive destinations,” it said.
Further, by addressing cost dynamics around accommodation, taxation and transport, India can position itself as a compelling value destination against its Southeast Asian counterparts.
Domestic vs international travel
The report noted that domestic travel spending accounted for 75.3 per cent ($4.97 billion) of total internal tourism spending in 2023, compared with 24.7 per cent ($1.63 trillion) from international visitor spending. Now, domestic travel spending is expected to grow at 3.9 per cent per annum to reach $7.6 trillion by 2034, while international visitor is projected to increase at 5.5 per cent per annum to $2.95 trillion over the same period, the report said.
It also mentioned that India‘s tourism landscape is undergoing a powerful transformation, with experience-led and high-value segments emerging as the next big growth frontier. From sports and culinary tourism to spiritual wellness, wildlife, and event-led travel, India‘s diverse offerings are increasingly capturing global imagination.
“India‘s live entertainment sector surpassed $1.28 billion in 2024 and is now projected to grow at 19 per cent CAGR over three years, making festivals, concerts, and sporting events powerful inbound drivers. AI and digital platforms are redefining travel discovery, while the rise of Gen Z, women, and solo travellers signals a fundamental shift in traveller profile that India must be equipped to serve,” the report said.
Published on April 27, 2026