By IANS,
New Delhi: The budget proposal for a service tax on room tariffs in hotels would be a retrogressive step and will keep foreign tourists away from India, a tourism industry expert said Tuesday.
According to Vivek Nair, chairman of World Tourism and Travel Council, India Initiative (WTTCII) and the vice chairman and managing director of Hotel Leelaventure, the proposal would amount to “a multiplicity of taxes”.
The union budget for 2011-12 has proposed a five percent service tax on room tariffs in hotels charging more than Rs.1,000.
Nair said in a statement that state governments like Kerala and Goa levy luxury tax as high as 12.5 percent on room tariff and the new proposal for service tax would only amount to a multiplicity of taxes as both will be on the same base amount of the room tariff.
In Kerala and Goa, the total amount of tax on the room charges would amount to 17.5 percent, he said.
In states like Delhi and Tami Nadu, which impose luxury tax of 10 percent and 12.5 percent respectively on the published room tariff rate instead of the actual rate, the total tax amount will be almost 23 percent, Nair added.
He said the World Tourism and Travel Council India Initiative has been imploring the state governments to amend their acts so that only luxury tax on the actual rate is charged from hotel guests.
This, in comparison with other competing tourism destinations like Singapore, Malaysia and Indonesia which levy only 3 percent, is extremely high and non-competitive for destinations in India, he said.
Nair also said that India received 5.58 million foreign tourists in 2010 while countries like China drew 50.9 million tourists, Malaysia 23.6 million, Thailand 14.1 million and Indonesia 6.3 million in 2009.
“Competitive tourist destinations like Malaysia, Singapore, Indonesia, and Thailand are imposing only 3 percent service tax. This increased levy would drive tourists away from India,” he said.