GST New Rates: In a major relief for consumers, the Goods and Services Tax (GST) Council on Wednesday approved a two-tier rate structure of 5 per cent and 18 per cent, which will take effect from September 22, 2025. The decision was announced after a day-long meeting in Delhi and is expected to make dining out, travelling, and holidaying more affordable just in time for the festive and wedding season. So how much relief does it bring to your pockets?
Dining out gets cheaper
Eating out will soon cost less as the GST on restaurant meals has been cut to 5 per cent. Currently, restaurants attract tax rates ranging between 12 per cent and 18 per cent depending on category. The uniform 5 per cent rate will apply across the board, making casual dining, family outings, and festive celebrations easier on the pocket. Restaurant owners, who had seen a dip in demand due to higher levies, are hopeful that the reduced rate will bring back more customers and will boost footfall.
Hotels see rationalised tariffs
Travellers will also benefit from the GST Council’s rationalisation of hotel tariffs. Rooms priced below Rs 1,000 per night will continue to remain tax-free. Rooms between Rs 1,000 and Rs 7,500 will now be taxed at 12 per cent, down from 18 per cent. Premium properties charging above Rs 7,500 per night will continue to attract 18 per cent GST. This change is likely to ease costs for middle-class families booking hotel stays for weddings, festivals, and vacations.
Flights become more affordable
Air travel, one of the costliest services under GST, will now see reduced rates. Economy class tickets will attract only 5 per cent GST, down from 12 per cent, while business class tickets will be taxed at 12 per cent, instead of the previous 18 per cent. This GST rate cut is expected to boost domestic travel during the upcoming festive season with Navratri, Durga Puja, Dussehra and Diwali just around the corner. This will also give some relief to frequent business travellers.
How GST rate cut will give a boost to services sector?
According to government officials, these GST rate cuts are aimed at boosting consumption in the services sector while directly putting savings into the hands of consumers. Tourism, hospitality, and aviation industries that were among the hardest hit during the pandemic are expected to see a boost from the decision.
With the festive season coming up, the GST cuts are expected to lift consumer mood, increase spending, and bring a boost to India’s services sector.