Next month, inflation is set to hit you in yet another way. Prepare to shell out more for gym memberships, spa visits and wedding venues as the Delhi government has decided to levy 3% ‘luxury tax’ on them.
Last month, the Delhi assembly had approved the Delhi Tax on Luxuries (Amendment) Bill 2012, under which luxury tax can be imposed on banquet halls (or any venue where marriage, reception, exhibition and other activities take place), spas, gymnasiums, health clubs and hotels that charge a minimum of Rs 750 per day per room.
The bill had approved 15% as the upper limit of the tax. The government has now specified the quantum it will levy, which is 3%. A notification to this effect will be issued soon.
All gymnasiums, health clubs and spas will have to get themselves registered under this act. Otherwise, they will not be allowed to operate.
“A proposal has been prepared specifying the quantum of charges to be levied on gyms, spas and banquet halls. We have kept it at 3% for now, but it can be revised later. We will send it to the Lt. Governor and a notification will be issued,” said a senior government official.
The government has termed these facilities as luxuries. Establishments that have an annual turnover of more than Rs 5 lakh will be taxed. However, in case of hotels there is no such limit and everyone will be liable to pay the tax.
Reacting strongly against this move, those running these establishments say it will affect their business adversely and they will be forced to pass on the burden to the consumers.
The government is hoping to mint Rs 10 crore through this tax.
“This will not affect the middle-class as the bill aims at taxing those with bigger earnings. We are not increasing the luxury tax, but are only trying to include new areas,” said a senior Delhi government official.