Now, city’s budget hotels may cost less

In a major relief to guest houses and budget hotels in the city, the Delhi Cabinet has approved a proposal to hike the taxable limit of luxury tax for rented rooms from Rs 750 to Rs 1,500 per room per night. The proposal is being sent to the LG for his prior approval before introducing it in the Assembly.

Presently, the hotels are required to pay 15 per cent as luxury tax for the rooms rented out at Rs 750 per day. The government will make amendments in Section 2 and 8 of the Delhi Tax on Luxuries Act, 1996 to implement the decision. Therefore, it needs approval from the Centre and also from the Delhi Legislative Assembly.

“We will try to pass the Bill in the upcoming Delhi Assembly session and implement the decision at the earliest for the benefit of the hotel industry and also to provide relief to tourists and visitors in the city,” said a senior officer of the Delhi government. The proposal to increase the taxable threshold was made in Budget 2016-17 by the Aam Aadmi Party government.

The change in the threshold limit will benefit several budget hotels in the city specially located in the areas such as Paharganj and Karolbagh and East Delhi areas. In Budget, the government had also decided to introduce self-declaration in luxury tax and assessment will be done on random basis which is currently compulsory for all hotels.

A government official also said that the government’s decision will ensure ease of doing business in the national Capital and benefit those, especially tourists, who now have to pay luxury tax on a hotel room whose tariff is Rs 750 per day and above.

“So far we were forced to keep our rates maximum at Rs 750 per room per night to avoid tax. But now we can charge up to Rs 1,500 which will promote improvement in quality of hotels and service as well. It will also promote better hotels in the city,” said Arun Gupta, a hotelier in Paharganj who is also the president of Delhi Hotel Mahasangh.