Hike in service tax will discourage tourists, impact hotel industry
April, 30th 2015
The proposed hike in service tax to 14% will adversely affect the hotel industry, a parliamentary panel has noted asking the Union tourism ministry to take up the issue with finance ministry for seeking relief for the tourism sector.
The standing committee on tourism headed by TMC MP Kunwar Deep Singh in its report, submitted in Parliament on Tuesday, said India already has a higher hotel tariff due to multiple tax regime both at the state and the Centre.
There are various indirect taxes applicable to tourism industry such as service tax on room rents, restaurant services, banquet services, convention services, rent-a-cab services, dry cleaning services, health club/beauty parlour services, internet services and money changing services.
Besides, VAT on sale of food and beverages in restaurants and banquet arrangements, state excise on alcoholic beverages is also imposed.
Apart from this, there are luxury taxes on room rentals, entertainment taxes on casinos, discos, video game parlours, state entry permit, road tolls. The direct taxes which are applicable to the sector are corporate tax, wealth tax, and taxes on immovable property.
The additional burden on hotel, restaurant and transportation will discourage the middle class tourists, both domestic and foreign from visiting tourist places, the report said.
The committee has expressed its disappointment to find the lack of concrete action plan to develop and integrate all important Buddhist centres in the country. It noted that the pace of work in development of Buddhist Circuits is very slow and it needs to be expedited in a big way.