How GST Simplification Aligns With India's Larger Ambition Of Doubling Tourism's GDP Contribution

India has set an ambitious target: doubling tourism's share of the GDP to 10% by 2030, up from about 5% in FY 2022–23. Achieving this will require not only physical infrastructure like airports and highways, but also policy reforms that redefine affordability, access and ease of travel. The recent simplification of the goods and services tax is one such reform, and its potential to unlock growth in tourism is significant.

Effective September 22, 2025, India's GST 2.0 regime moved to a streamlined three-slab structure of 5%, 18%, and a new 40% rate for select categories such as luxury and sin goods. While certain high-end products and services face higher rates under this new structure, many essential and widely used goods and services will benefit from lower or more transparent taxation.

For travellers, this means more clarity and predictability in costs. For example, hotel accommodation priced up to Rs 7,500 per night attract a flat 5% GST without input tax credit, replacing the earlier 12% rate. Properties where any room exceeds that threshold are taxed at 18% with credit eligibility.

What was once a confusing system of multiple slabs and tariff-based classification is now simpler and easier to understand, allowing households to plan their budgets with confidence. For the tourism industry, the stability of a clearer tax framework encourages investment and expansion. For foreign visitors, transparent pricing strengthens India's competitiveness compared to regional peers. Together, these shifts bring industry priorities in step with the government's ambition of tourism contributing ten percent to GDP by the end of the decade.

The ripple effects, however, extend far beyond tourism. Lower GST on everyday essentials (whether food, transport, or accommodation) directly influences household budgets. By easing the pressure on routine spending, these reforms create more disposable income and financial flexibility. What feels like a small saving per booking or meal compounds across an itinerary, creating the space for more frequent, longer, and more adventurous travel. For millions of Indians, it could mean the difference between postponing a trip and finally taking it; or even turning the dream of a first international holiday into reality.

At its core, this reform reflects a shift in governance: from complex compliance to simplicity, from opacity to transparency, and from policy designed for systems to policy designed for citizens. By reducing friction and building trust, the government is laying a stronger, more sustainable foundation not only for India's tourism economy but for the wider economy as well.

India's tourism journey cannot be defined only by the destinations it promotes; it must also be defined by how seamless, affordable, and welcoming the journey feels. From the first hotel search to the final checkout, simplicity matters. The GST reform underscores that point. It shows that when policy reduces complexity and builds trust, it does more than cut costs: it changes behaviour, expands participation, and accelerates growth.

"Incredible India" has long been a campaign about heritage, culture, and natural beauty. With reforms like GST simplification, it can also stand for a world-class travel experience defined by ease, predictability, and trust. If followed by equally forward-looking measures, this could mark the beginning of a transformative decade (one in which India not only attracts more visitors but also empowers millions of its citizens to explore their own country, and the world, with renewed confidence).