As of September 22, 2025, new GST rates in India for travel services, particularly for air travel, have been implemented to simplify tax slabs, with economy air travel staying at 5% GST (without Input Tax Credit) and business/first-class air travel increasing to 18% GST (with Input Tax Credit). Private jets and luxury travel face a 40% flat GST.
The GST rate for business and premium class air travel has increased from 12% to 18%, effective 22 September 2025, raising ticket costs for these services.
What are the new changes in GST 2025? Starting September 22, 2025, GST in India will be simplified to primarily two rates: 5% and 18%, with a special 40% rate on luxury and sin goods like tobacco and high-end vehicles.
The GST on tours and travels depends entirely on whether you claim the Input Tax Credit. If you are claiming ITC, the applicable GST rate will be 18%, but without ITC, the rate will be 5%. These rates have a significant impact on the price of the tour packages. If you do not choose ITC, you will get a lower cost.
The international flight is GST-free. The domestic accommodation and tour are taxable.
GST on hotel rooms is reduced from 12% to 5% for tariffs up to ₹7,500 per day, effective 22nd September 2025. No ITC is allowed at 5%, so hotels with both budget and premium rooms must carefully manage their tax credits. Rooms priced above Rs.7,500 will continue to attract 18% GST, and ITC is fully available here.
Calculation: Base Price: ₹50,000. GST Amount: ₹50,000 × 18% = ₹9,000. Total Amount: ₹50,000 + ₹9,000 = ₹59,000.
Yes and no. Hotel VAT is levied by the government and charged to the guest. The hotel forms the middleman, transferring VAT from guests to the government. VAT, GST and sale taxes therefore don't really represent a hotel cost or a hotel fee in the traditional sense.
Good news is, Starting July 2025, the HST/GST credit has increase by 2.7%, helping low- and modest-income households stretch their budgets. This tax free quarterly payment can put hundreds of extra dollars into your pocket each year.
India's Goods and Services Tax (GST) system has entered a new era with the rollout of GST 2.0, effective from September 22, 2025. The Council has simplified the structure into a 5% slab for essentials, 18% for standard goods, and 40% for luxury/sin items, replacing the earlier complex categories.
For any standard-rated supplies of goods or services that you make on or after 1 Jan 2024, you must charge GST at 9%. For instance, if you issue an invoice and receive payments for your supply on or after 1 Jan 2024, you must account for GST at 9%.
Goods and Services Tax (GST) 2.0 reform, which came into effect from September 22nd, 2025, brought relief for the common people and boosts for businesses. One of the key GST updates under 2.0 reform is that it simplified the GST tax structure from a 4-slab (5%, 12%, 18% and 28%) to a 3-slab (5%, 18% and 40%).
Ans. For travellers flying on Economy class tickets, a GST rate of 5% will be applicable on international travel. On the other hand, the applicable GST rate is 12% for Business and Premium Economy class fliers.
Yes, business travellers can claim ITC on their hotel stays if the booking is made for business purposes (not personal travel) and is billed under the business GSTIN.
Example
For adding GST, the following formula is used.
You could get up to: $533 if you are a single individual. $698 if you are married or have a common-law partner. $184 for each child under the age of 19.
Unified GST Slabs for Service Providers:
In the past, different GST rates for buying flights, hotels, and package tours made things confusing for travel providers. For now, the tours and travels GST rate stays the same: 5% for domestic tour companies (without ITC) and 18% for those who choose to claim an ITC.
What was the decision in 56th GST council meeting? The long-discussed proposal for a two-tier GST structure has now been approved (and implemented starting from 22nd September 2025): 5% GST: Applicable to most essential and everyday goods and services. 18% GST: For higher-value products and services.
Key Categories of Goods under 40% GST Slab
Key items exempted from GST:
Total Net GST revenue for October 2025 stands at ₹1,69,002 crore, which is 0.6% higher(monthly growth) and 7.1% higher (yearly growth) than the corresponding period last year at ₹1,68,054 crore.
Subtracting GST from Price
To calculate how much GST was included in the price, divide the total price by 11 ($1000∕11=$90.91). To calculate the price without GST, divide the price by 1.1 ($1000∕1.1=$909.09).