Hotel and Restaurants Association of western India Hotels in Mumbai, Resorts in Lonavala, Pune Apartments, resort in Silvassa,
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  Union Budget - A stimulus to Growth
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.

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.

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.