Friday 31 May 2024

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Economy | Finance

Hoteliers irked over new luxury tax structure


The hotel industry in Goa at large appears totally sore over the new luxury tax structure announced by the state government, as announced while presenting the annual budget in March.

While chief minister Francisco Sardinha claims that the hotel industry as well as the tourist would be relieved from overburden of taxes, the non-star hoteliers feel the new proposal would severely affect the industry.

While rationalising the old luxury tax structure of 5, 10 and 12 per cent to only 8 and 12 per cent, the ordinance issued recently based on the budget proposal has also changed the pattern on which taxes would be imposed.

The old pattern had luxury tax fixed on the basis of room tariff while also counting three different rates for the peak season from November to February, off season from June to September and the seasonal rates for the rest of the period.

It is however now 12 per cent per day for all the hotels classified as three star and above while charging 8 per cent for all other categories. Around 16 hotels coming under the first category however comprise hardly 12 per cent of the total bed capacity in the coastal state.

"We are still confused about the charging system though it appears on face value that almost all the non-star category hotels would suffer with the new pattern", says S V Balaram, the president of the Travel and Tourism Association of Goa.

According to him, the star hotels would benefit from it as it would be either three per cent reduction or little similar to what they were paying earlier against other small hotels, who have to pay at least three per cent more with the rationalisation.

Incidentally, thousands of Goans run small hotels and paying guest houses (providing one or two rooms in their own house) all along the Goan coast while most of the star hotels are run by national or international chains. Though those charging tariff below Rs 100 are exempted from it, there is hardly anybody here who charges less than this.

Balaram is also critical of the new composite billing system of all the services from laundry to courier to tele-faxing by rescinding the earlier notification which had exempted all these services from the tax bracket.

"It would pave way for easy billing on which the hotels were otherwise losing out while the tourist was being burdened on the basis of room tariff", claims Manohar Parrikar, leader of the Bharatiya Janata Party in the coalition partner.

But the TTAG is also critical of bringing time share agreement or package deal agreement under the luxury tax structure afresh. They would now pay minimum Rs 300 per day while those having any one of the facilities like swimming pool, health club, tennis court, golf course or shopping arcade would be charged Rs 500.

In addition, points out businessman-turned-Congress MLA Jitendra Deshprabhu, many luxury guest houses are not classified in the star category. "Linking luxury tax to star category would obviously benefit them", he observes.

Strengthening his argument, former chief minister Dr Wilfred de Souza even points out at Taj Holiday Village at Candolim, which has not been classified but provides all the facilities of a five star hotel.

The new luxury tax structure has come into force after tourism being accorded industry status, thereby reducing the power and water tariff. "But there is no much difference than what we were paying earlier if we sum up the whole thing at the end of the day", claims dejected Balaram, who plans to meet the authorities shortly. is now on Telegram & also Youtube. Kindly subscribe for free & remain updated.

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