STATE BUDGET GIVES PARTIAL TAX RELIEF TO HOTEL INDUSTRY

Mumbai: The Hotel and Restaurant Association of Western India (HRAWI) has welcomed Maharashtra Government’s state budget that has announced partial tax relief to the industry. The hotel industry had been advocating a revision in the Luxury tax for the last few years and has hailed its revision. The new budget proposes exemption of Luxury tax up to Rs 1,000, 4% up to Rs 1,500 and 10% exceeding Rs 1,500. Also, it offers concession in luxury tax for new hotels or expansion of existing ones in B and C zone cities like Thane, Navi Mumbai and Nashik.

Mr. D.S. Advani, President, HRAWI while welcoming the new move says, “the hotel industry had been approaching the state Government at various levels for a revision in the Luxury Tax. The current luxury tax structure was not feasible in today’s scenario and would have negatively impacted tourism growth.”

“As per the previous tax structure, any hotel room with a tariff of above Rs.750/- and up to Rs. 1199/- was taxed at 4% and those above Rs.1200/- was at 10%. We had been requesting for an increase in the threshold limits. Since, a mere Rs.750/- does not justify being called luxury in today’s scenario, HRAWI had proposed that the limit be raised to at least Rs.2000/-. However, it gives us hope that in the near future it will be further rationalized,” says Mr. Advani.

The state budget has also reduced the late fee on VAT return from Rs. 5000/- to Rs. 2000/- for delay of up to one month and the turnover limit for registration under VAT has been increased from Rs. 5 lakhs to Rs. 10 lakhs.

“This is a progressive step adopted by the Government. Small restaurants and hotels will benefit from this move,” says Mr. Gurbaxish Singh Kohli, Vice-President, HRAWI. “But there is a lot more that is needed to give support to the ailing hotel and tourism related industries. It was accorded industry status over a decade ago however the accompanying benefits in subsidies were never passed on to us. For instance, electricity duty charged to Hotels and Restaurants is at the commercial rate of 13% as against the rate of 6% levied on industrial units. Power and water are the major cost of operation in hotels and restaurants. If the Government gives us the due benefits, not only will the hospitality industry grow, but tourism in Maharashtra will also see a big surge,” adds Mr. Gurbaxish Singh Kohli, Vice-President, HRAWI.

One of the sops provisioned in the current budget include the increase in the turnover limit for filing audit report from Rs. 60 lakhs to Rs. 1 crore. “This increase in the threshold limit will certainly bring major administrative relief for businesses such as restaurants but would not bring any monetary benefits,” says Mr. Pradeep Shetty, Honorary Secretary, HRAWI.

“The state of Maharashtra is evenly poised to give a run for its money to power states like Rajasthan, Goa and Kerala. It has all the natural resources. All that is needed is a little support from the Government. Today, due to insufficient infrastructure and high taxes, Maharashtra does not enjoy the same kind of tourist preference as some of the other states. But with positive Government measures we are sure that Maharashtra will become one of the highest ranked states for tourism,” concludes Mr. Kamlesh Barot, immediate past President, HRAWI.