18th April 2011

The Uttarakhand government has announced exemption in Luxury Tax (LT) for five years on old buildings, which would be converted into hotels with an investment of 50 per cent of the current market value. The government currently levies five per cent LT on room rents for all hotels in the state.

According to a report in The Business Standard, the exemption will be applicable from the date of commencement of the business or other conditions specified in the new notification issued by Alok Kumar Jain, Principal Secretary (Finance), Government of Uttarakhand. The notification also said the government would exempt the LT for five years on new tourism units also. The exemption will also be available for the expansion of hotels and tourism units with a minimum of 25 per cent investment of the current market value.

“In places like Mussoorie and Nainital, there are several buildings which belong to the colonial era. In case the owners intend to convert them into hotels, we are providing them a good opportunity,” said a government official.

In the annual budget presented in the state assembly last month, Ramesh Pokhriyal Nishank, Chief Minister, Uttarakhand had announced exemption of LT on non-air conditioned rooms of small hotels and dhabas. However, at a time when the government has announced new sops for the hotel industry, plans are also afoot to levy 10 per cent tax on all hotels where the room rent is more than Rs 3,500 per day.

“Keeping in view our endeavour to increase the state’s revenue through various taxes, we are now planning to impose fresh LT on all hotels, which charge room rent of more than Rs 3,500 per day,” said the official.

"travelbizmonitor"