The recent GST reforms announced at the 56th GST Council meeting are set to reshape India’s travel and tourism industry, placing travel agents at the intersection of new opportunities and emerging challenges.

For hotel accommodation priced up to ₹7,500 per day, the GST rate has been reduced from 12% with input tax credit (ITC) to 5% without ITC. While this makes travel more affordable for consumers, travel agents lose ITC benefits, potentially compressing margins.

In non-economy class air travel, the GST rate has increased from 12% with ITC to 18% with ITC. This change raises fares for business travelers but ensures agencies serving corporate clients can still claim full ITC, aiding cash flow management.

One of the most significant developments is the amendment of Section 13(8)(b) of the IGST Act, which now allows services provided by travel agents and tour operators to foreign clients to qualify as exports. This recognition enables agencies to avail zero-rated benefits under GST, including refunds of input tax credit, while also strengthening their global competitiveness.

The motor vehicle transport sector has also seen changes. The GST rate remains at 5% without ITC, but for those opting for full ITC, it has risen from 12% to 18%, requiring agencies to evaluate their business models carefully.

Commenting on the reforms, Jyoti Mayal, chairperson of the Tourism and Hospitality Skill Council, said,“The latest GST reforms bring both relief and responsibility for travel agents. On one hand, reduced hotel tariffs will stimulate demand in the domestic tourism segment. On the other, the removal of ITC in this category will require agents to realign their pricing strategies. Most importantly, the recognition of intermediary services as exports is a game-changer, unlocking opportunities for Indian travel businesses to expand their global footprint while enjoying the benefits of zero-rated taxation. Luxury travel is as important and needs to be promoted more, as the returns are higher, spends are higher, and it is exclusive. India needs to focus on inbound luxury tourism to stay competitive with neighbouring countries”.

As the sector adapts, the focus will be on balancing affordability with sustainable business models, ensuring Indian travel agents remain competitive in both domestic and international markets.

Diageo India (United Spirits Ltd.), one of the country’s leading alcobev companies, has signed a Memorandum of Understanding (MoU) with the Tourism and Hospitality Skill Council (THSC) to train 300 students under its flagship ‘Learning for Life’ programme. The signing ceremony was attended by Praveen Someshwar, MD & CEO, Diageo India; Rajan Bahadur, CEO, THSC; Mr. Navdeep Singh Mehram, Vice President – CSR & Sustainability, Diageo India; and Mr. Vaibhav Verma, Vice President – Industry Engagement, THSC.

This initiative reflects Diageo India’s continued commitment to creating a diverse, skilled, and future-ready workforce, in line with its Spirit of Progress ESG action plan.

The classroom-based training programme will be held at THSC-affiliated centres in Bengaluru and delivered by certified trainers and assessors. Designed as a short-term skilling programme for unemployed and underprivileged youth, it is aligned with the National Skill Qualification Framework (NSQF). The curriculum will cover technical training, communication, digital literacy, and soft skills, preparing candidates for roles in the hospitality, business, and service industries. Upon completion, participants will undergo assessment and certification by THSC, providing credibility and industry recognition.

With its strong network of over 750 industry partners, THSC will facilitate placements and apprenticeships for successful candidates, enabling them to secure employment in hotels, restaurants, quick-service chains, and allied services.

Praveen Someshwar, MD & CEO of Diageo India, said: “The hospitality sector is a vital engine of growth and opportunity. Through ‘Learning for Life’ and with the Tourism and Hospitality Skill Council, we are empowering young talent with the skills and confidence to thrive, building not just careers, but a more inclusive India.”

Rajan Bahadur, CEO of THSC, added: “We are proud to partner with Diageo India on the ‘Learning for Life’ initiative, which aligns closely with our mission to skill and empower youth for meaningful careers. The hospitality sector continues to be one of the largest job creators, and this programme will provide participants with practical skills, exposure to industry standards, and a pathway to sustainable employment.”

Launched in 2020, Diageo India’s ‘Learning for Life’ programme has already impacted the lives of over 6,500 students. By providing equal access to training and resources, the programme helps boost employability, improve livelihoods, and strengthen the hospitality sector with a more inclusive and skilled workforce.

 The recent GST rationalisation is being hailed as a positive move across the food & beverage, hospitality, and FMCG sectors, promising easier operations, reduced compliance costs, and growth opportunities.

Mr. Simranjeet Singh, Director, CYK Hospitalities, said, “The GST rationalisation represents an uplifting change for startups and emerging F&B brands, making operations simpler. Previously, multiple tax slabs made it difficult for young entrepreneurs to set transparent pricing, stay compliant, and remain competitive with cost-conscious consumers. Now, with just two slabs—5% for essentials and 18% for other products—startups can clearly plan product mix and expansion. Lower-slab products encourage demand for QSRs, cloud kitchens, and packaged foods, while premium offerings remain on the higher slab. The reform empowers the ecosystem with creativity, credibility, and new growth avenues for both emerging and established players”.

Mr. Sanjay Jain, Director, ElanPro, added, “GST rationalisation is a welcome step that will boost consumption and investment across sectors. In hospitality, room tariffs below Rs. 1,000 are now tax-free, mid-range hotels at Rs. 1,001–7,500 are taxed at 5%, and even premium hotels above Rs. 7,500 have dropped from 28% to 18%. This is likely to drive higher occupancy and create demand for kitchen upgrades and modern refrigeration. Restaurants and catering operations also benefit, with GST reduced to 5% for non-AC outlets under Rs. 50 lakh turnover, air-conditioned restaurants, and outdoor catering services. Lower costs allow operators to invest in food safety, storage, and quality”.

He further noted that FMCG and dairy companies will gain from relief on essentials like UHT milk, paneer, and cheese, enabling stronger cold storage and refrigerated logistics. Additionally, renewable energy devices now taxed at 5% make solar-powered cold storage more viable. Jain observed that while some effects may be indirect or medium-term, these reforms are a strong catalyst for India’s commercial refrigeration industry, supporting faster and broader cold chain adoption.

The consensus among industry leaders is clear, GST rationalisation not only simplifies compliance but also strengthens India’s F&B, hospitality, and FMCG ecosystem, fostering innovation, investment, and sustainable growth.