Hotel Talk

MP govt proposes tax benefits for hotels

Sanjeev Bhar - Bhopal

The Madhya Pradesh government has announced several tax benefits to hotels operating in the state. In his state budget speech, the finance minister of MP, Raghavji has announced that luxury tax on hotels charging a room rate of up to Rs 500 will be nil, while for those charging Rs 501 to Rs 1,000 will be five per cent. Hotels charging a room rate of Rs 1,001 and above will continue to pay luxury tax at ten per cent.

Raghavji informed the floor of the house that the bar licence fees for the year 2006-2007 would not be raised. Also, luxury tax exemption has been announced for new hotel projects aggregating investments of Rs 100 crore and above for a period of eight years. During the 13th Regional Convention of Hotel & Restaurant Association (Western Region) that took place in Bhopal earlier, the hoteliers appealed to the government to reduce the luxury tax rates in the region in order to promote business and attract more tourists.

Appraising the concern coming from the hotel fraternity, the finance minister responded positively agreeing to some of the demands proposed by the association. Reacting to the budget announced, Sunit Kothari, HRA (WI) chairman for the MP co-ordination sub-committee, said, "The positive response will see a lot more good happening to the state's hospitality scenario." He also thanked the minister for the state's approach towards the concerns of hotels as an industry and to the overall approach in order to raise the tourism potential of the state. The state government of Madhya Pradesh has earmarked Rs 55 crore and Rs 12.40 crore for development of roads leading to tourist destinations and airports of Bhopal and Indore, respectively. The budgetary allocation for tourism promotion has also been raised from Rs 16.75 crore to Rs 57.19 crore.