Sector report: Hotels
Key Players: The Indian Hotels Company, EIH, ITC Hotels, Asian Hotels, Bharat Hotels, Oriental Hotels and Hotel Leelaventure
| Duty Structure |
|
|
| Services Tax |
|
Expenditure Tax (%) |
| Nil |
|
10 |
| |
|
|
| Sales Tax (%) |
|
(decided by states) |
| City |
Food |
Beverage |
| Mumbai |
7 |
15 |
| Delhi |
15 |
25 |
| Chennai |
22.5 |
22.5 |
| Calcutta |
6 |
6 |
| |
|
|
| Luxury Tax (%) |
|
(decided by states) |
| City |
|
in % |
| Mumbai |
|
10 |
| Delhi |
|
10 |
| Chennai |
|
20 |
| Calcutta |
|
12.5 |
Background
- Around 54 per cent of all five-star hotel rooms are concentrated in Mumbai and Delhi.
- The hotel industry is heavily taxed. In India, taxes constitute around 30 per cent of a guest's bill value as against 3 to 6 per cent in South East Asia and 10 to 15 per cent elsewhere.
- The industry enjoys export status with 80 HHD benefits. Under this, 50 per cent of eligible profits derived from services provided to foreign tourists are exempt from income tax.
- With tourist arrivals stagnating for the past three years, the hotel industry's performance has fallen short of expectations.
Expectations from the Budget
- The Federation of Hotel and Restaurant Associations of India wants the government to grant infrastructure status to the hotel industry.
- The industry is unlikely to get any tax breaks as the government is looking at increasing tax revenues to meet the burgeoning deficit. At best, no additional taxes may be imposed.
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Fiscal report card
SECTOR ANALYSIS:
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