Extend five-year tax holiday scheme to 5 star hotels: Assocham

With just 16 months left for the Commonwealth Games, industry chamber Assocham has sought extension of the five-year tax holiday scheme to five star hotels in the national capital region and infrastructure status for the sector in the Union Budget.

The chamber also said that the hotel industry should be exempted from tax on services received outside the country.

It said the tax holiday scheme of five years, announced in the Union Budget of 2007-08 for two star, three star and four star hotels, besides convention centres in NCR, should also be extended to five star hotels.

"This facility needs to be extended to all categories of hotels including five star hotels so that their capacity expansion takes place at desired speed to accommodate large number of travellers to India during the games," Assocham said.

Further, it said, to accelerate the pace of construction of more hotels, the hotel industry should be accorded an infrastructure status so that it can enjoy fiscal benefits.

Assocham's demand came as some of the leading hoteliers are looking for ideal sites in Delhi and the NCR region for establishing their chains to strengthen hospitality industry.

In the NCR alone, around 27 new hotels are coming up with about 4,900 rooms in various categories over the next three to four years, the chamber said.

Groups like Radisson have already set up its hotel in Noida and other players like J P Group, Inter-continental, Clark Group and Chatwal Group are also planning to build 250-300 rooms hotel in the NCR area, Assocham said.

Besides, there are already 70 new hotel projects that are under various stages of development to add 19,000 rooms in the next two years, it said.

The chamber has recommended to the Delhi government that it should persuade the Finance Ministry to announce extension of 5 years holiday scheme so that hotels get tax benefits and are incentivised to execute their expansion plans.

"The chamber has forwarded the same proposal to the Ministry of Finance demanding that infrastructure status for hotel industry should not be delayed since the industry is highly capital-intensive and has very long period of return on investment," Assocham Secretary General D S Rawat said.

Assocham also said tax on services received by hotels outside India like commission paid to foreign travel agents be exempted.