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Monday, Mar 03, 2003

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`Big boost to hospitality sector'

Our Bureau

CHENNAI, March 2

THE Finance Minister has given a boost to the hospitality industry, which has seen no growth in the past two years, with a number of sops. The exemption from expenditure tax was welcomed by the industry as this is expected to be a major step towards reducing the cost of stay for the tourists.

Mr L. Krishna Kumar, Vice-President, Finance, Indian Hotels Company Ltd, said that the withdrawal of expenditure tax would have the effect of improving the demand and net realisation for the hotel industry. This is a major step taken by the Government in rationalising taxes on the tourism sector.

He said that the reduction in customs duty to five per cent and abolition of countervailing duty would help reduce project costs and improve returns from projects. The extension of relief to lenders for hotel projects, since the lenders will get a tax exemption on income from lending to hotel project, will have the effect of lowering borrowing costs for hotel companies, he added.

Mr Krishna Kumar said that the extensions of eligibility to set off past losses in the case of amalgamation of hotel companies (which has been available to other industries) have now been extended to hotel projects.

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