The Delhi government has proposed to reduce the luxury tax on hotels and restaurants in the city from the current 12.5 to 10 per cent. The announcement was made by Dr A K Walia, Finance Minister, Delhi during his budget presentation for 2009-10 in the state assembly on June 22, 2009. The minister has proposed an additional value added tax (VAT) of almost eight per cent on tobacco products to offset the loss in revenue due to reduction in luxury tax.
According to the minister, "The luxury tax reduction was announced to provide stimulus to the travel trade industry, which was badly affected due to a decline in the tourism sector. Keeping in mind the demand made by this sector in view of the impending Commonwealth Games and in order to provide much needed stimulus, we have decided to reduce the luxury tax on hotels from 12.5 per cent to 10 per cent with immediate effect."
However, industry associations have been demanding tax rationalisation. Their demands, like consideration of actual tariff for tax calculation against the published rates and slab system, were not considered by the minister.
Source:Hospitality Biz Delhi government reduces luxury tax on hotels, restaurants
