Mumbai: The Hotel and Restaurant Association of Western India (HRAWI) has announced that it expects the new Finance Minister to present a friendly budget. The sector that has been at the receiving end of rising taxes and other burdens for over a decade now is hopeful that at least some of the recently introduced burdens will be eased out this year.
In the run up to the budget, the
association has identified four key parameters that will play a crucial role in
the resurrection of the sector. To reduce the burden and help boost commerce,
HRAWI has suggested the following:
Infrastructure: Lowering the minimum project cost mandated for
inclusion of hotels in the Reserve Bank of India’s Infrastructure Lending List
from Rs.200 crores to Rs.20 crores for hotels that have 20 or more guest rooms.
Depreciation: Depreciation on hotel building under Section 32.
Hotels were eligible for a depreciation allowance of 20 per cent on their
‘Plant’ (Building) till March 31, 2002. Thereafter, it was scaled down to 10
per cent vide Notification No. 291/2002, dated September 27, 2002. HRAWI
requests for restoring the 20 per cent depreciation allowance.
TDS: Under Section 194H, hotels are required to deduct tax at source
at the rate of 10 per cent on commissions paid to travel agents. In actual
practice, the payments received from travel agents by hotels are net of
commission. Subsequently, hotels have to deposit the applicable tax on their
own account and later on make efforts to recover the same from the travel
agents. Commissions on hotel bookings should be exempt from TDS.
De-linking of Taxes: Every budget either introduces or reduces or increases
some tax and links it with the star category of the hotel. HRAWI would like to
urge this Government to not link any taxes (past, present and future) to star
category.
The hotel industry is presently
plagued by several bureaucratic obstacles and the growth trajectory of the
overall sector including tourism, is stagnating. The industry has been battling
to keep up with the harsh financial burdens brought about by both the central
and state governments that include Service
Tax – charged by the Central Government, Luxury Tax – charged by the State,
Value Added Tax (VAT) – on Food and Beverage, Excise Duty – on Beverages and
Octroi Duty - on items imported into the State, among others.
The hospitality industry has high
expectations from the new government based on the pre-election manifesto that
promised tourism and hospitality to be one of the pivots for economic growth. Tourism
plays a key role in socio-economic progress through creation of jobs,
enterprise, infrastructure development, and foreign exchange earnings. The new
government has acknowledged this and only the outcome of the budget will
determine if the tourism and hospitality industry will receive its due.
About Hotel & Restaurant Association Western India (HRAWI)
The Hotel and
Restaurant Association (Western India) is a 64 years old Association of Hotels
and Restaurants in Western India. Its members include Hotels up to 5-Star
Deluxe categories like The Taj, Trident, Hyatt, J.W. Marriott and The Leela who
are some of the prominent members of our Association. With around 1300 members
across Western India, HRAWI covers Maharashtra, Gujarat, Madhya Pradesh,
Chhattisgarh, Goa and the Union Territories of Daman, Diu & Silvassa is
considered to be the voice of the Hotel Industry. The association is part of
the national body of Federation of the Hotels & Restaurants Associations of
India (FHRAI), located in New Delhi, which was originally founded in Mumbai in
1950 by the late Mr. J.R.D. Tata.
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