Ahead of the upcoming budget session, Hotel and Restaurant Association of Western India (HRAWI) has sought assistance from the Maharashtra Government for revisiting and revising key areas in taxation and licensing policies for the hospitality and tourism industry.
“The hotel industry has been engaging with the Maharashtra Government at various levels for a revision in the Luxury Tax. Presently, any hotel room with a tariff of above Rs.750/- and up to Rs.1199 attracts a tax of 4 per cent and those above Rs.1200 attracts 10 per cent. We have been repeatedly requesting for an increase in the threshold limits. Since, a mere Rs.750 does not justify being called luxury in today’s scenario, we are proposing that the limit be raised to at least Rs.2000. Also 10 per cent tax is exorbitant. So we have proposed that the next applicable tax slab be 6 per cent for a room tariff of above Rs. 3000,” said D.S.Advani, President, HRAWI.
In the last few years, the hotel industry has been gripped by several 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.
“Hotel and tourism related industries were accorded the status of an industry by the government 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,” added Gurbaxish Singh Kohli, Vice-President, HRAWI.
Talking about the entertainment duty Kohli stated, “Each passing year there has been a new amendment to the policy and it comes with an additional burden to the industry. The existing Entertainment duty (pursuant to the amendments three years back), is exorbitant, unreasonable and prohibitive. On the other hand, to encourage tourism activities during off season Government of Goa reduces the tax rates up to 50 per cent.”
“The states of Rajasthan, Goa and Kerala are considered to be tourist havens not because they are more beautiful than Maharashtra. It is because these Governments proactively promote tourism, allocate necessary funds and legislate tourism friendly policies. If Maharashtra has to feature itself in the tourism map, it will have to pull up its socks and give tourism the much-needed support. Affordable lodging is one of the primary requisites for a vibrant tourist State,” said Kamlesh Barot, Immediate Past President, HRAWI.
“The adjoining states have been spending significant funds on the promotional campaigns and, as a result, are witnessing a robust growth in terms of travellers. On the contrary, in our state, Foreign Tourist Arrivals (FTAs) as well as Domestic tourists have decreased steeply in the last few years and we urge the government to take necessary step to curb this trend before the damage becomes irreparable,” concluded Barot.
