Apex body of hotels & restaurants demand Govt charge it on ‘actual room rent’
The apex body of hotels and restaurants has petitioned lieutenant Governor Najeeb Jung for rationalising luxury tax as the current rate is quite stiff. The Federation of Hotel and Restaurant Association of India (FHRAI) in a memorandum sought lieutenant Governor’s intervention as Delhi was charging 10 per cent under this head that is quite high as compared to other States. Their demand is that the Government should charge it on the actual room rent.
In their representation to Delhi Government, the hotels and restaurants owners said that hotels in Delhi have been struggling with low occupancies on account of the sharp economic downturn and lower than anticipated tourist arrivals. They say that UP, Rajasthan, Haryana, Punjab, Chandigarh are charging luxury tax on actual tariff while Delhi Government is charging at the rate of 10 per cent of published tariff. The rate of luxury tax is much lower in these States as compared to Delhi. They also demanded to lower the rate of luxury tax and demanded that it should be levied only on actual room tariff.
“Hotels and guesthouses should be allowed to revert to the earlier practice of submitting different room tariff offline, at least till a similar functionality is incorporated in the online module as well,” they said.
“It is pertinent to note that by their very nature, hotel rooms are a perishable commodity with only a 24 hour shelf life. Hence, it is a standard industry practice worldwide that rooms are offered at differential rates during off season and lean days of the week and also depending on the market segment, for instance, corporates, airline crew, long-stay guests. In all such cases, the actual rates charged to the customer are at a considerable discount to the hotel’s published tariff,” they said.
It may be noted that the Excise Department is now planning to track down hotels that may be evading tax by not registering with the state. Sources said that the State plans to seek data on hotels that may be out of the tax net from the municipal corporation and Delhi Police to launch a crackdown. As of now, there are 1,143 hotels of all categories registered with Department of Excise covered under the luxury tax bracket.
The Excise Department is also planning to study the room occupancy status to understand causes of low booking. While the economic recession is cited as one common reason for fewer tourists and business travelers, it is also felt that with more hotels coming up in the NCR the business traveller has a greater choice and prefers to stay closer to his place of conference or work.