Sahay: waive 5% tax on hotel rooms

With the hotel industry reeling under the impact of heavy taxes, the Union tourism ministry has urged Finance Minister Pranab Mukherjee to waive 5 per cent service tax on hotel rooms.

“We have taken up the matter regarding 5 per cent service tax on hotel rooms with the finance minister,” said Union Tourism Minister Subodh Kant Sahay.

The move came following representations made by the hotel industry from various states like Uttarakhand, Kerala and Goa where the state governments also levy luxury and other taxes adding to the woes of the hoteliers.

With new hotels facing the hassles of multiple approvals, the ministry has constituted a Hotel Development and Promotion Board(HDPB) to facilitate clearances concerning the Government of India agencies, Sahay said, adding the states have also been advised to introduce such mechanism or single window system for faster clearances.

Sahay said the tourism sector in India is witnessing an encouraging growth with foreign tourist arrivals (FTAs) of 5.58 million in 2010. This was 9.58 per cent higher than 2009, the year when the world financial turmoil was at its peak.

“India’s share of international arrivals is only 0.5 per cent of the global market, which is very small when we compare it with our country’s potential,” Sahay said yesterday while sharing the latest trends in the tourism sector at the sidelines of a conference of tourism ministers of eight north-central states here.

With a view to attract more foreign tourists for a longer duration, the tourism ministry has now set a target of 1 per cent of the total world tourists in the next five years and accordingly increase the capacity of hotel rooms to 500,000. “For accommodating 1 per cent of the total world tourists, we need 500,000 hotel rooms in the next five years,” said Sahay.

Growth in tourism has also led to a gap in trained manpower in hospitality sector. Sahay said the ministry is trying to bridge this gap through various schemes and broad-basing of the hospitality education. Through ‘Hunar Se Rozgar’ scheme, special training cab be organised in the hospitality sector for youths with cent per cent funding from the tourism ministry.

The CBSE affiliated schools are also offering hospitality courses in class XI and XII level which is now being extended to state boards also, he said.