Confusion in tax policy hits ‘Bed and Breakfast’ scheme

Confusion in tax policy hits ‘Bed and Breakfast’ scheme
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First Published: Mon, Mar 26 2007. 12 27 PM IST
Updated: Mon, Mar 26 2007. 12 27 PM IST
New Delhi: Confusion over whether they would be charged commercial or domestic taxes while opting for the “Bed and Breakfast” scheme, launched to counter shortage in lodging facility during Commonwealth Games in 2010, is keeping Delhiites away from vying for the venture.
Ever since the Union Tourism Ministry launched the scheme in November last year, the ministry has received only 120 applications from parties offering their houses to double up as tourist lodges.
“People are hesitant because the Delhi government is yet to finalise its taxation policy on the houses giving such facility,” a senior official in the Tourism Ministry told Press Trust of I ndia.
There are several types of taxes—electricity tax, property tax, water tax—and the parties are not sure whether they will be charged commecial tax rates or domestic tax rates, the official said.
Delhi also has luxury tax if establishments like hotels are started, which would add to the tax burden on the entrepreneur.
“There are other factors also which could be keeping people away from the scheme. That is apprehension about accommodating a stranger,” he said.
“Indian family value system is such that people are generally wary of keeping a stranger in the house. Also it is altogether a new concept in India, though Bed and Breakfast is a common thing in the West,” the official said.
The “Bed and Breakfast” scheme requires a party to get its ownership of the house confirmed first. It is followed by police verification.
After that, the Tourism authorities inspect the facilities and give rating “Gold” and “Silver” depending upon the quality of amenities. The licence is granted only after the benchmarking is complete.
Expecting an acute shortfall in lodging facilities along with an increase in tourist inflow, the Ministry of Tourism intensified its publicity efforts on Bed and Breakfast scheme as part of the Rs 69 crore “Incredible India” campaign.
The ministry is expecting a tourist growth of 12% to 15% per annum till 2010 and has assessed that a total of 30,000 hotel rooms would be required in Delhi to accommodate tourists and visitors to the Commonwealth Games 2010.
Various land owning agencies like DDA, Haryana and Uttar Pradesh governments, Indian Railways and Airport Authority of India have been approached for allocating more sites for hotels and also for adopting annual rental payment in place of outright auction of plots to promote low priced accommodation in budget hotels.
These agencies have also been requested to consider higher Floor-Area-Ratio for hotels, allowing land use change so that private entrepreneurs owning land are also allowed to build hotels.
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First Published: Mon, Mar 26 2007. 12 27 PM IST
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