Union Budget - A stimulus
to Growth
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Mr. Vivek Nair - President of Hotel
& Restaurant Association (Western India), heartily
welcomes the Budget proposals moved by the Hon’ble
Union Finance Minister - Mr. Jaswant Singh. The several
proposals mooted by him in his budget speech, will
give a fillip to the tourism sector. In particular,
the Hospitality Industry, is delighted to note -
1. Abolition of Expenditure Tax in toto, for which
the Industry has been clamouring for the last several
years. It may be recalled, last year, the Hon’ble
Finance Minister had removed Expenditure Tax on the
F&B operations in Hotels. The proposal, will lead
to reduction of tax burden on the tourist. Henceforth
the guests will be paying only the Luxury Tax levied
by the State Government. The Association, also welcomes
the Finance Minister’s suggestion to the State
Governments, to reduce the State Luxury Tax and is
hopeful that the States, will follow the bold initiative
and example set by the Union Finance Minister. This
will further reduce the tax burden, on the guests,
which ranges between 4% to 15% in Western India.
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2. The inclusion of Hotel Industry in the infrastructure
category, will induce additional investment
in this sector, as it will allow IDFC and other
financial Institutions to treat interest received
on loans granted to Hotel Industry, as its tax
free Income. This will result into reduced rate
of interest on long term loans (for a period
of 9 years) granted by such Institutions to
Hotels 3 Star and above. Such a reduction in
rate of interest will help in the Hotel projects,
becoming more viable and effect substantial
savings in cost of project during the construction
period, which is generally more than two years.
The Industry, expects that the cost of finance
would be around 7% to 9%, instead of 14% to
16% as at present due to this status of infrastructure
announced by the Hon’ble Finance Minister.
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3. It is indeed a welcome step, to
reduce the customs duty on imported liquor and other
Food & Beverage items. With more and more foreign
tourists expected to visit India, due to the intensive
promotional measures initiated by the Government as
well as the Industry, such a reduction in custom duty
will enable Hotels to provide to their foreign guests,
the brands which they desire at reasonable prices.
4. Last but not the least, the support
announced by the Union Government, for setting up of
a world class Convention center in Mumbai, will indeed
be a boon to the Hotel Industry. The long felt need
for the Convention center, in this commercial capital
of India, is thus on the verge of fulfillment.
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