Delhi’s hospitality sector has strongly opposed the proposed luxury tax scheduled to be applicable from Aug 10, as it reels under the impact of stiff competition and the global economic slowdown.
As many as 10,000 hotel rooms among 438 hotels across all categories in the state are estimated to fall under the proposed tax regime.
Apex hospitality body, Federation of Hotels & Restaurant Associations of India(FHRAI) said that this new tax rate will hamper not only growth but will also push cost beyond affordable levels.
“We have been advocating that hotels that are charging less than Rs 3,000 should be exempted from the tax. The state government needs to consider this seriously that Delhi hotels will eventually face competition form NCR rivals as hotel rooms based in Gurgaon and Noida will not have luxury tax levied on them,” said Saeed Shervani, Vice-President, FHRAI and Managing Director, Shervani Hospitalities Ltd.
Lieutenant Governor Tejender Khanna had approved the rules of excise department. According to the rule, Delhi government will levy three percent luxury tax on spas, gymnasiums and banquet halls from 10 August.
The proposed luxury tax would be levied on hotel rooms (tariff above Rs 750); banquet halls, spas, health clubs (annual turnover of Rs 5 lakhs). The luxury tax would be in excess of the VAT levied.
The proposed rule will now have the hotel rooms in Delhi to charge 30 percent total tax on the bills as per a report in Tehelka. Countries with tourism-friendly policies like Thailand charge 8-10 percent as tax.
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