Unregistered gym, spas to be fined up to lakhs

Owners of gymnasiums, spas and banquet halls in the city could soon face a heavy penalty, running into lakhs, if they fail to get themselves registered under the Luxury Tax Act. Neelam Pandey reports.

Owners of gymnasiums, spas and banquet halls in the city could soon face a heavy penalty, running into lakhs, if they fail to get themselves registered under the Luxury Tax Act.

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The excise department, which has notified the Delhi Tax on Luxuries (Amendment) Bill 2012, has set a deadline of September 8 for all establishments that have a turnover of more than Rs. 5 lakh to get registered. In case of non-compliance, the penalty can range between Rs. 1 lakh and Rs. 20 lakh, depending on the turnover of the establishment.

"The penalty imposed by us will be equivalent to the tax that the establishment needs to pay us. For instance, if one needs to pay tax worth Rs. 5 lakh then they will be liable to pay another Rs. 5 lakh as penalty," said a senior Delhi government official.

According to the officials, apart from the penalty, an interest of 24% will also be imposed. There is a provision of prosecution for a year too.

The excise department has already started sending notices to 500 banquet halls and farmhouses, asking them to register themselves.

"We have a database of 500 establishments so far and our inspectors have been sending them notices, along with a registration form, asking them to register soon to ensure penalty is not imposed on them," added the official.

All gymnasiums, health clubs and spas will have to get themselves registered under this act otherwise they will not be allowed to operate.

While so far the government has decided to impose a tax of 3% luxury tax, it will be increased next year. The government is hoping to earn a turnover of Rs. 10 crore by imposing 3% luxury tax.

"This will not affect the middle class, as the bill only aims at taxing those with bigger earnings. We are not increasing the luxury tax but only trying to include new areas," said a senior Delhi government official.