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Centre Asks States to Reduce Luxury Tax

Anurag Bhullar


With a view to revive the Tourism Industry that is experiencing big fallback due to the global slowdown, the Central Government has come up with a proposal for States to lower luxury tax on Hotels and sales tax applied on food and beverages.


The Tourism Ministry has also asked States to develop a single-window permit system and to rationalize road and passenger taxes. Presently, a Luxury Tax of 5 to 20 percent is charged by the government in different states. A letter has been written by the Tourism Ministry to Prime Minister’s Office asking them to make tourism as a part of stimulus package. A higher reimbursement of 90 percent of service tax is being requested (as against 75 percent at present), with an increase in floor area and declaration of hotel construction as an infrastructural project.


The Union Tourism Secretary, Sujit Banerjee has already given a presentation to the finance ministers on this matter. He has asked for a uniform rate of 4 percent on the actual tariff charged by the hotels. Similarly sales tax on food and beverages should be reduced and rationalized to boost up demand.

 
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