MCD to reduce tax on city guesthouses

There is good news for tourists who prefer to stay in guesthouses instead of hotels.

There is good news for tourists who prefer to stay in guesthouses instead of hotels.

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The Municipal Corporation of Delhi (MCD) has passed a proposal to reduce property tax on guesthouses, inorder to ensure that they remain affordable for low-income tourists.

Earlier, guesthouses in the city had to pay more property tax than a two-star hotel. But with guesthouse owners unhappy with the arrangement, MCD has decided to bring taxes at par with two-star hotels.

“Lower-income tourists prefer guesthouses because of their affordability, so it does not make sense to impose high taxes on them. Earlier, all guesthouses were asked to pay 20 % tax irrespective of their category, now they will pay at par with two-star hotels, which means a maximum of 15%,” said a senior official of the MCD.

Welcoming the news, Arun Gupta, president of Delhi Hotel Mahasangh said guesthouses remaining affordable will boost tourism. “We have been paying high taxes for the last two years despite not being allowed to increase finances by setting up restaurants and bars. We want MCD to return the extra tax they have been taking from us,” he said.

MCD charges property tax under unit area method, in which it has set eight categories of areas — A, B, C, D, E, F, G and H. While for hotels — depending on the commercial value of the areas — different taxes are applicable, guesthouses have to pay the same tax irrespective of the category. This means guesthouses in areas such as Burari pay the same tax as those in Paharganj that see brisk business.

To cut down on the anomalies, the property model of hotels has been adopted. Depending on the category — A, B, C, D, E, F, G and H — guesthouses will have to pay 15, 15, 12, 12, 12, 10, 10 and 10% respectively.

The proposal has been passed by the House of MCD and will be implemented as soon as the municipal commissioner gives it a green signal.