Year-End Travel Planning: How GST 2.0 Can Help You Save Big on Flights and Hotels

Planning a holiday at the end of the year? If yes, then your travel budget is about to get a shake-up with the implementation of GST 2.0, effective September 22, 2025. The revised Goods and Services Tax (GST) rates will directly impact both hotel stays and flight bookings. While premium travelers may feel the pinch, budget-conscious holidaymakers could actually benefit from the changes.

Here’s a detailed breakdown of how GST 2.0 will affect your travel expenses and how you can plan smarter to save more.

Hotel Bookings: Big Savings on Mid-Range Rooms

The biggest relief comes for travelers who prefer mid-range hotels. Under the new GST regime:

• Rooms priced up to ₹7,500 per night will attract only 5% GST instead of the earlier 12%.
• Rooms costing above ₹7,500 per night will now carry 18% GST.

This makes a clear difference in cost. For instance:

• A room priced at ₹7,000 per night earlier added ₹840 as GST. Now, you’ll only pay ₹350, saving ₹490 per night. Your final bill becomes ₹7,350.
• On the other hand, if you book a room for ₹8,000 per night, GST alone will cost you ₹1,440, bringing your total to ₹9,440. That means paying over ₹2,000 extra just for choosing a slightly higher-priced room.

👉 Smart tip: Always aim for rooms priced below ₹7,500 per night to maximize savings.

Air Travel: Premium Tickets Get Costlier

While hotels may turn cheaper for many, premium air travel will burn a deeper hole in your pocket. Starting September 22, 2025:

• Business class, premium economy, and first-class tickets will carry 18% GST, up from the previous 12%.
• This means a business-class ticket, which is already expensive, will cost significantly more post-GST hike.

Economy-class travelers, however, can relax. Economy tickets will continue to be taxed at 5%, with no change under GST 2.0.

👉 Smart tip: If you must travel in premium cabins, book your tickets before September 22. Even if your journey is scheduled for later, pre-bookings will still attract the lower 12% GST rate.

Cancellation Policies Remain Favorable

What if you book tickets under the old GST rate and later cancel them? The good news is that you won’t lose out. Airlines are required to refund the exact GST charged at the time of booking. So, even if the tax rate changes later, your refund will not be affected.

What Travelers Should Do Now

With GST 2.0 set to change travel expenses, here are some practical strategies:

Book hotels smartly: Stick to rooms below ₹7,500 per night to save significantly on GST.

Avoid premium flights unless necessary: Economy remains the most cost-effective choice.

Pre-book premium tickets: If business or first-class is unavoidable, secure your tickets before September 22 to lock in the lower tax rate.

Don’t worry about cancellations: Refunds will always reflect the GST you paid at booking, not the revised rate.

Final Thoughts

GST 2.0 is a mixed bag for travelers. For those who love luxury and premium travel, the new tax rules mean higher costs. But for budget travelers, especially those opting for mid-range hotels and economy flights, the changes are actually good news.

By making informed choices—like booking rooms under ₹7,500 and avoiding unnecessary premium travel—you can ensure your year-end holiday remains enjoyable without breaking your budget.