If you’re planning a vacation, a weekend getaway, or even a business trip, the latest tax reforms are set to make your travel significantly cheaper. The government has announced a major tax rationalisation for the hospitality sector among others, and the biggest winner is the budget traveler. Specifically, the Goods and Services Tax ( rate on most homestay and hotel accommodation across the country has been slashed.
This pivotal move centers around the GST Cut initiative. Effective , the on rooms priced up to per night (which is what most of our rooms offer at the Rustic Homestays India) has been reduced from to a low . This is a game-changer for mid-segment hotels, guesthouses, and, crucially, homestays. In this article we share how this affects your upcoming travels.
The new rate is directly targeted at making travel more affordable for the middle class and promoting domestic tourism.
| Room Tariff (Per Night) | Old GST Rate | New GST Rate (w.e.f. Sep 22, 2025) |
|---|---|---|
|
Below Rs. 1,000 |
0% |
0% |
|
Rs. 1,000 to Rs. 7,500 |
12% |
5% |
|
Above Rs. 7,500 |
18% |
18% |
The reduction for the to bracket is where most homestays (including ours) and mid-market hotels fall, which is why this GST Cut reform is so widely welcomed.
As dedicated hosts, we believe this is an unparalleled opportunity to make high-quality, authentic homestay experiences more accessible than ever before.
How our guests can save more with GST cuts?
The GST reduction translates into a direct saving of 7% on the basic room tariff component of your bill.
A Real-World Example of Your Savings
Let’s look at a typical three-night stay that was booked under the old rate and is now being billed under the new rate:
| Particulars | Old GST (12%) | New GST (5%) |
|---|---|---|
|
1x night tariff |
INR 3000 |
INR 3000 |
|
GST Amount |
INR 360 |
INR 150 |
|
Total 1x night cost |
INR 3360 |
INR 3150 |
With the GST Cut rates this amounts to a total of average savings of INR 210 per night. While this may not sound like much, our guests save more for longer stays and when booking larger rooms for double/twin occupancy and with time all this adds up.
All this money saved can easily be spent on local food, activities, or extending your trip!
GST cut implications for Your Bookings
We understand guests need clarity on how this change affects their current and future plans.
For New Bookings (Made after Sept 22, 2025)
The new 5% GST rate is applicable immediately. All new bookings will automatically reflect the reduced GST in the final invoice.
For Existing Bookings (Made before Sept 22, 2025)
This is a critical point that works in the guest’s favour:
The applicable GST rate is based on the date of supply (the date of stay) and the invoiced value, not the date of booking.
If your stay date is on or after September 22, 2025, and your room tariff is ₹7,500 or less, we are mandated to charge the new, lower 5% GST rate.
Action for You: If you booked earlier at the 12% rate, your final invoice will be adjusted at check-out to reflect the 5% rate, and you will receive the benefit of the difference.
Key Takeaways
The GST Council’s decision to reduce the tax on accommodation up to ₹7,500 is a monumental victory for travelers seeking authentic, local, and affordable experiences. It confirms the commitment to boost the domestic tourism sector and makes India significantly more competitive globally.
At the Rustic Homestays, we are proud to pass this substantial saving directly to our valued guests across all our operational locations. Your retreat is now 7% cheaper, making it the perfect time to book that long-awaited family vacation, solo trip, or weekend getaway.
Start saving on your perfect stay today!
