The Hotel and Restaurant Association (Western India)
(HRAWI) has termed the recent changes in the property tax system and the
basis on which the capital value of starred hotels is calculated, a
blow to the organised sector of the hotel industry. This was stated by
the association in a letter it sent to Sitaram Kunte, municipal
commissioner, Municipal Corporation of Greater Mumbai (MCGM); recently.
Starred hotels have to pay much higher taxes – amounting to 2.2 times for one- to four-star hotels and 2.5 times for five-star properties. HRAWI said, “This obviously means that all budget hotels, namely four-star hotels and below, would prefer to remain unstarred. This would be a big setback for the tourism industry and would retard the growth of tourist arrivals in Mumbai in the long-run.”
The association stated that starred hotels in the budget category earned less than 50 per cent of revenue per room in comparison to five-star hotels or properties with more stars, and therefore the burden would be unbearable. It added, “The taxation structure is so high that five-star hotels pay five times more tax than the amount paid by residential properties.”
The letter, signed by D S Advani, president, HRAWI, and vice-president, Federation of Hotel and Restaurant Associations of India (FHRAI), further stated, “Any hotel built after 2013 has to pay 50 per cent more tax than a property built in or before 2010. This makes newly-constructed hotels unviable to operate due to the phenomenal tax fees that have to be paid.”
Starred hotels have to pay much higher taxes – amounting to 2.2 times for one- to four-star hotels and 2.5 times for five-star properties. HRAWI said, “This obviously means that all budget hotels, namely four-star hotels and below, would prefer to remain unstarred. This would be a big setback for the tourism industry and would retard the growth of tourist arrivals in Mumbai in the long-run.”
The association stated that starred hotels in the budget category earned less than 50 per cent of revenue per room in comparison to five-star hotels or properties with more stars, and therefore the burden would be unbearable. It added, “The taxation structure is so high that five-star hotels pay five times more tax than the amount paid by residential properties.”
The letter, signed by D S Advani, president, HRAWI, and vice-president, Federation of Hotel and Restaurant Associations of India (FHRAI), further stated, “Any hotel built after 2013 has to pay 50 per cent more tax than a property built in or before 2010. This makes newly-constructed hotels unviable to operate due to the phenomenal tax fees that have to be paid.”
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