With the hotel industry seeing up to 60 per cent cancellations in bookings in the wake of the Mumbai terror attacks, Union Minister for Tourism and Culture Ambika Soni wants the Prime Minister to announce an incentive package for the sector.
In a letter to the PM, Soni sought a four per cent reduction in luxury tax, up to 90 per cent reimbursement of service tax (at present at 75 per cent) and de-linking of hotel projects from commercial real estate projects, which will enable easier
finance and lower running costs and taxes.
The minister also wants Section 80 D HHD of the Income Tax Act for the tourism sector to be revived. The revival would see the industry get IT exemption on 50 per cent of earnings as part of foreign exchange and even the other 50 per cent if the income is invested in the same sector. The section was withdrawn in 2005.
Furthermore, the ministry wants the government to consider reduction in floor area ratio (FAR) and peg it at 25 per cent for hotels built before the Commonwealth Games and 50 per cent for those after. As of now, FAR is pegged at 100 per cent.
Sonia, who first took up the issue with the PM on board his flight to Shantiniketan on December 6, explained to him the need for financial incentives for the tourism sector, so it can cope with the ongoing financial crisis. “Widespread cancellation of hotel bookings up to 60 per cent across the country is causing much concern and fear in industry circles,” she said.
Harish Sood, president of the Federation of Hotels and Restaurants Association of India, said: “We are happy the minister took up the issue with the PM. We hope the incentives will be approved so the hotel industry can come out of the slump it is experiencing due to the economic slowdown and the terror strikes.”