The GST rate card every tour operator should pin (2026)

It has been ten months since GST 2.0 rewired travel taxation, and operators are still costing packages off rate sheets their hotel and cab vendors printed in August 2025. Some of those old numbers are now too high. Some are too low. Neither mistake is small once you multiply it across a season of departures.

The 56th GST Council meeting on 3 September 2025 collapsed India's GST slabs into a two-rate structure (5% merit, 18% standard, with a 40% band for demerit goods), effective 22 September 2025. For most consumer categories that meant a cut. Two things every tour operator buys moved the other way: business-class air, and vehicle rental with a driver. That mixed direction is exactly why "gst 2.0 travel industry changes" keeps trending in operator WhatsApp groups. The headline story was rate cuts, but your supplier invoices didn't all move the same way.

This post is the cheat sheet to pin above your costing sheet: every rate you touch as an operator, what changed on 22 September 2025, and a worked example for repricing a package that's still running on last year's numbers.

The 2026 rate card: what GST 2.0 actually changed for travel

Here is the full rate card as it stands as of July 2026. Confirm current rates with your CA before you reprice a live quote. GST notifications move fast, and this is a snapshot, not a filing.

What you're buying or selling	GST rate	ITC available
Air ticket, economy class	5%	No
Air ticket, business/premium class	18% (up from 12%)	Yes
Hotel room, ≤₹7,500/unit/day	5% (down from 12%)	No, mandatory
Hotel room, >₹7,500/unit/day	18%	Yes
Motor vehicle rental with driver, fuel included	18% (up from 12%)	Yes, full
Motor vehicle rental with driver, fuel included	5%	Yes, limited to same-line-of-business inputs
Your outbound/domestic tour package (operator's own supply)	5%, reported unchanged	No

Three of those rows need unpacking, because the detail is where operators lose money.

Hotels: the ₹7,500 rule that's mandatory, not optional

The old hotel slab was simple in a bad way: a ₹6,000 room and a ₹9,000 room both sat somewhere near 12%, and a hotel could often structure its GST filing to suit itself. GST 2.0 split rooms at the ₹7,500-per-unit-per-day line. Anything above that line pays 18% with ITC available to the hotel. Anything at or below it pays 5%. Here's the part operators keep getting wrong: that 5% comes with no ITC, and it isn't optional. The Finance Ministry had to issue a specific clarification because hotels were trying to elect into 18%-with-ITC on cheaper rooms to keep claiming input credit on renovations and F&B. That workaround is closed. If the room is ≤₹7,500/day, the hotel charges 5%, full stop, and the ≤₹7,500 slab itself was cut down from the old 12%.

For your costing sheet, this is good news at the ≤₹7,500 end: rooms got cheaper. It's a trap if your rate card still shows 12% on them. If a DMC or hotel is quoting you "₹6,500 + 12%" in 2026, that invoice is wrong, or you're being quietly overcharged.

Careful: A per-unit-per-day threshold means each room, each night, stands on its own. A ₹6,000 room and a ₹9,200 room in the same itinerary don't average out to one blended rate. Cost them separately, at 5% and 18% respectively, or your package margin math will be off by a real number, not a rounding error.

Air travel: economy stayed at 5%, business/premium jumped to 18%

Economy air held at 5%, same as before the rejig. Business and premium economy did not: that rate was raised from 12% to 18% effective 22 September 2025. If you build honeymoon or MICE packages with a business-class upgrade line item, that upgrade got noticeably more expensive to source, even though the client-facing narrative around GST 2.0 was "rates came down."

The detail that catches operators out: the applicable rate depends on when the ticket is booked and paid for, not when the client actually flies. A business-class sector booked and paid for after 22 September 2025 carries 18%, even for a departure well into 2026 or 2027. If you quoted a package in August 2025 assuming 12% on a business-class add-on for an October 2026 departure, and you're only issuing the ticket now, you'll eat the 6-point gap unless you've already repriced.

Tempo traveller and car rental: two rates, one vendor conversation

Vehicle rental with an operator (the tempo traveller for a hill-station group, the sedan-with-driver airport transfer, the outstation SUV) now sits under one of two rates, and the vendor chooses which: 18% with full ITC (raised from the old 12%), or 5% with ITC restricted to inputs from the same line of business. A vendor who has diesel, tyres and maintenance to offset will often prefer 18%-with-ITC, since the input credit softens the increase. A smaller operator with fewer input invoices might stay at 5%.

Either way, the number on your vendor's quote just moved, and most tempo traveller and taxi contracts signed before September 2025 don't reflect it. Ask which scheme your vendor has opted into before you lock a group tour's transport line. It changes the landed cost, and it tells you how firm their all-in quote actually is.

Your own 5% hasn't moved, but check your invoices anyway

The rate you charge clients on a packaged tour under the margin scheme is reported to remain unchanged at 5%, without ITC on the inputs used to build that package. Nothing in the September 2025 Council notifications specifically touched the tour operator's own output rate. But because this piece is about your rate card rather than your output invoice, treat that "unchanged" as a working assumption to verify against your own GST filings, not a settled fact to build a defence around. If you're unsure whether to invoice a given package at 5% or 18%, that decision tree (and the ITC arithmetic behind it) is covered properly in 5% without ITC or 18% with it: solve it with arithmetic and 5% or 18%? How to invoice a tour package correctly. This post is about what your suppliers are charging you, not what you charge your client.

The package-repricing worksheet

Here's what stale rates actually cost, using round numbers close to a real hill-station-plus-flight package.

Example: A 5N/6D package quoted in early 2026 for an October departure includes a ₹6,500/night hotel room for 5 nights and a business-class upgrade add-on priced at ₹18,000 base.

Hotel, old rate card (12%): ₹32,500 + ₹3,900 GST = ₹36,400 Hotel, current rate (5%, no ITC): ₹32,500 + ₹1,625 GST = ₹34,125 Difference: ₹2,275 cheaper than the old sheet assumed.

Flight upgrade, old rate card (12%): ₹18,000 + ₹2,160 GST = ₹20,160 Flight upgrade, current rate (18%): ₹18,000 + ₹3,240 GST = ₹21,240 Difference: ₹1,080 more expensive than the old sheet assumed.

Net effect on this package: ₹1,195 cheaper overall, but only if you've actually updated both lines. An operator who updated the hotel line (because a vendor mentioned the cut) but never touched the flight line has quietly under-quoted the flight component by ₹1,080 per client, and will discover it as a margin gap when the ticket is actually issued.

Run this same two-line check against every live quote that still carries a business-class or premium add-on, and against every hotel component near the ₹7,500 line. The costing sheet you rebuild for 2026 should carry both new GST lines as separate fields, not a single "plus taxes" blend. That's what let this drift happen in the first place.

What to renegotiate before your next contract renewal

1. Ask every hotel and DMC partner for a rate sheet dated after 22 September 2025. Many contracts signed in 2023 or 2024 are still circulating unchanged.
2. For any hotel room priced near ₹7,500, get the applicable GST-inclusive rate stated explicitly. "Plus taxes" is not good enough when the difference between slabs is 13 points.
3. Ask vehicle vendors which ITC scheme they've opted into (18% full ITC or 5% restricted). It tells you whether their quote has room to move.
4. Update your own costing sheet's GST fields to the current slabs, split by category rather than blended, ideally in software that keeps GST rates current automatically rather than a static sheet.
5. Reissue any pending quotes for departures more than a few months out with the current GST math, especially anything carrying a business-class sector.

Careful: A vendor invoice that still shows 12% for a hotel room or vehicle rental dated after 22 September 2025 is either an error or a vendor who hasn't updated their billing system. Either way, it's your problem the moment you cost a package off it. Flag it before you sign, not after the client has paid.

Common questions

Does the GST rate depend on the travel date or the booking date?

For air travel, the rate applies based on when the ticket is booked and paid for, not the date of travel. A business-class ticket issued today for a 2027 departure is taxed at today's 18%, not whatever rate might apply by the time the client flies.

Can a hotel still charge 18% with ITC on a room under ₹7,500?

No. The Finance Ministry clarified that the 5% no-ITC rate on rooms priced at or below ₹7,500/unit/day is mandatory. Hotels don't get to elect into the higher rate to preserve their own input credit.

What if my itinerary mixes rooms above and below ₹7,500?

Cost each night on its own room rate rather than averaging across the stay. The threshold is applied per unit, per day, so a ₹6,000 night and a ₹9,500 night in the same trip sit in different slabs and should be quoted and costed separately.

Does the hotel's 5% affect my own tour operator margin-scheme rate?

No, they're unrelated. The hotel's 5% is the hotel's own output tax on the room it sells you. Your rate on the packaged tour you sell the client is a separate calculation, reported to still sit at 5% without ITC. Confirm the mechanics with your CA if you're building a new package structure, since the two numbers don't offset or combine.

The short version

• Economy air held at 5%; business/premium air rose from 12% to 18% from 22 September 2025. The rate applies to booking/payment date, not travel date.
• Hotel rooms ≤₹7,500/day dropped from 12% to 5%, and that 5% is mandatory with no ITC. Hotels can't elect into 18%-with-ITC on cheap rooms anymore.
• Hotel rooms above ₹7,500/day sit at 18% with ITC, unchanged in structure.
• Vehicle rental with a driver moved from 12% to either 18% with full ITC or 5% with restricted ITC. Ask your vendor which scheme they picked.
• Mixed itineraries need per-night, per-slab costing. Don't average a ₹6,000 and a ₹9,500 room into one blended rate.
• Get every hotel and vehicle vendor to confirm their current rate sheet before your next contract renewal. Many are still quoting September 2025's numbers.
• Your own 5% output rate on packages is reported unchanged, but that's a supplier-cost problem, not proof of your own invoicing. Confirm your invoicing rate with your CA separately.