Agra hotels stay cool towards tax sops

At a time when the hospitality industry is demanding more sops for its development in view of the upcoming Commonwealth Games, the hotel industry of Agra has failed to take advantage of the existing concessions provided by the Uttar Pradesh government in its hotel policy, since 2003.

In a surprising revelation made by the UP tourism department, though a larger number of hotels have opened up in Agra in the past five years, no hotel has so far applied to seek eligibility for the 5-year luxury tax holiday.

According to UP tourism officials, the state government had announced a new hotel policy in January 2003: New hotels opening in Agra could apply for an exemption on depositing luxury tax for a period of five years, subject to the approval of the district magistrate.

But five years since it was formally announced and publicised by both the state government and UP Tourism, the scheme has found no takers. Though new hotels are still opening up in the city, the district magistrate has not received any applications for tax exemption under the scheme.

Explaining the cause of the hospitality industry's reluctance in applying under the scheme, Surendra Sharma, founder president, Agra Hotel & Restaurant Association, said that the industry was well aware of the scheme launched by the state government but this scheme offered no immediate benefits to the hotels in Agra as majority of hotels in the town fell in the budget category, charging tariffs below the ceiling of Rs 1,000 at which the luxury tax became applicable.

Also, he said, no star-category hotels had been constructed in Agra in the past five years and since the scheme had been specifically tailored to facilitate star hotels only, the lack of response in the hospitality industry was obvious.

According to Sharma, there was a need for at least 5,000 more rooms in Agra during the 2010 commonwealth games and unless the state government declared some sops for setting up new budget hotels and upgrade of old ones, such a tremendous boost in the room capacity was quite unlikely.

Besides, industry sources claimed, the tax had not exactly been exempted by the government. It had been left on the discretion of the district magistrate who could either exempt or defer the tax for a period of five years after which, the hotel had to pay the tax for the past five years alongwith the current year's tax, creating unnecessary hassles and paperwork, which made the scheme unpopular.