Home / Budget / Budget Expectations /  Hotels body seeks infra status, tax sops from budget

India’s hospitality industry is pushing for tax exemptions as well as infrastructure status from budget 2023, said Hotel Association of India.

The association said the industry is expecting a rationalization of all taxes including a reduction in goods and services tax (GST) rate charged to customers for certain categories of hotels.

GST on hotel tariffs and restaurants within hotel premises must be reduced from 18% to 12% to ensure that Indian hotels are on par with global markets. Taxes on hotels in China, Singapore and Thailand are at 5-7%, and India can only get its intended 100 million foreign tourists by such policy interventions. The body said infrastructure status will encourage atmanirbharta and more local investments.

“We don’t want any freebie from the government, but it should walk the talk," said K.B. Kachru, vice president, Hotel Association of India and chairman emeritus of the Radisson Hotel Group.

According to the industry body, infrastructure status will ensure easier access to funds for hotel project developers, including institutional credit, and help reduce development costs, especially for affordable projects.

For long-term development of the industry and to increase tourist traffic, the Centre must focus on last-mile connectivity and develop infrastructure for all segments, and not just five-star or mid-scale hotels. If tourism is a growth pillar for India’s economy, since it accounts for 9% of employment, then why should it not get infrastructure status? said Kachru.

The body’s key demands include rationalization of taxes and tax rates, easy compliance norms and improved conditions for running a business, besides policy interventions, including moratorium. It will boost long-term growth for the sector, and encourage investments and productivity, and create more employment, Kachru added.

“If infrastructure status is granted, hotels can be given an industry status in states which will allow them further incentives like low tariffs for utilities which are given to other industries like manufacturing and automobiles."

Licensing and other permits would also become cheaper, easier to get and once the status is granted and executed," said Kachru.

For instance, capital expenditure which comprises 70% of a project’s cost is allowed 35% deprecation in other industries but for hotels, it is 10% at present.

It has also recommended that business losses be carried forward for 12 years instead of the current eight years. “This is the most justified incentive for a sector that supports inclusive growth and has shown the resilience to come out of two years of near-zero business. It will encourage cash flows and reduce the severe liquidity problems caused by the pandemic," he added.

Varuni Khosla
Varuni Khosla is a journalist with close to 14 years of experience in writing business news stories for mainstream newspaper companies like Mint and The Economic Times. She reports and writes on luxury and lifestyle brands, hospitality and tourism news, the business of sports, the business of advertising and marketing and alcohol brands.
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