Hotel industry gets tax relief of 8%

The latest bill of VAT, approved on Wednesday, has proposed reduction in tax on hotel and restaurant industry from 12.5 per cent to four per cent. The reduction is much more than the one percent reduction in taxes anticipated by the hotel industry

"We have agreed with the state government's decision and this reduction will lead in no price rise in the hotel industry," said T K Tekwani, president of Hotel & Restaurant Association, Gujarat.

However, VAT levied on the hotel industry in other state is one per cent, he said. "Since the state government has declared this year as Gujarat Tourism Year, we were expecting the tax to be around one per cent. This would not only would have help us but also the customers," he added.

The organised hotel industry in the state is worth Rs 100 crore and by charging four per cent the state government has not favoured the hotel industry during the tourism year'," Tekwani said.

Narendra Somani, secretary of the association said with the total proposed tax of 18.5 per cent""that is 12.5 per cent VAT and six per cent service tax together, the customer would have avoided taking bills.

"But now with four per cent of VAT and six per cent of service tax the total taxes will be around 10 per cent which is nominal," Somani added.

"The hotel industry was aiming high with one per cent of VAT. However, by comparing 12.5 per cent tax to four per cent tax, the relaxation of 8.5 per cent is welcomed any day," said Somani.

He said hotel industry in many states are charged with eight per cent and compared to them, tax in Gujarat will be just half of it.

Further, Somani said the industry has plans to host international food festivals with Gujarati food. "We will help the state government to promote Gujarat Tourism Year," he said.