HOTEL INDUSTRY GETS PARTIAL TAX RELIEF
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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 1000, 4 per cent up to Rs 1500 and 10 per cent exceeding Rs 1500. Also, it offers concession in luxury tax for new hotels or expansion of existing ones in B and C zone cities such as Thane, Navi Mumbai and Nashik.
D.S. Advani, President, HRAWI, while welcoming the new move said, “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 per cent and those above Rs.1200 was at 10 per cent. 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 rationalised.”
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. 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 per cent as against the rate of 6 per cent 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,” stated 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,” said Pradeep Shetty, Honorary Secretary, HRAWI.
“The state of Maharashtra is evenly poised to give a run for its money to power states such as 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,” concluded Kamlesh Barot, immediate past President, HRAWI.