The Hindu Business Line : Duty-free credit scheme — Hotels told to pass on benefits to clients

ALL hotels (one-star and above), heritage hotels and standalone restaurants availing themselves of the duty-free credit entitlement scheme for service providers would now be required to pass on the entire benefits of the scheme to their consumers.

The Government has issued a directive to this effect through an amendment in the Exim procedures.

Under the duty-free credit entitlement scheme, hotels are entitled duty-free imports equivalent to 5 per cent of the average foreign exchange earned by them in the preceding three licensing years.

The duty-free credit entitlement can be used for import of any capital goods, including spares, office equipments and professional equipments, office furniture and consumables so long as such goods are freely importable under ITC (HS). However, import of agricultural products, dairy products, motorcars, sports utility vehicles and all-purpose vehicles are not allowed even if such items are freely importable under ITC (HS).

Informed sources said most of the hotels are interested in availing themselves of the scheme for import of liquor as consumables. "The Director-General of Foreign Trade (DGFT) has now said that hotels would have to pass on the entire benefit of the duty-free entitlement to consumers. The liquor prices at hotels should move southwards consequent to the DGFT directive," sources said.

Service providers which have achieved a minimum free foreign exchange of Rs 30 lakh in the preceding 1/2/3 licensing years are allowed to avail themselves of the duty-free credit entitlement scheme. The benefit under this scheme is subject to actual user condition. The duty-free credit entitlement certificate and the goods imported under the scheme are non-transferable.