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Karnataka
Karnataka Hotels' assn wants luxury levy on actual charges
Our Bureau
Bangalore
,
March 30
Hotels in Karnataka have urged the Government to revise its policy of levying luxury tax on the published room tariff and revert to the earlier practice of imposing it only on the actual charges collected by hotels from its customers.
In a representation to the Deputy Chief Minister and Finance Minister, Mr B.S. Yediyurappa, the Federation of Hotel and Restaurant Association of India, said several states had abolished the levy of luxury tax and others except Karnataka, Tamil Nadu and Andhra Pradesh had amended the Luxury Tax Act to make it applicable only on the actual tariff charged by the hotels. Andhra Pradesh, however, had relented by fixing a flat rate of five per cent luxury tax on the published rate.
Stating that the levy went against the spirit of the State Government's recognition to tourism as a potential industry for generating more jobs, it continued with the punitive rate of 12.5 per cent on the rack rate. (The Government increased the allocation to tourism sector by more than three times to Rs 52 crore in the current budget proposal).
While reiterating its demand to levy the tax only on actual charges or to follow the Andhra Pradesh model of a lower rate on the published tariff, the association representatives said after enjoying levy concession only on the actual rate for a year in 2003-04, the restoration of the current levy was affecting the business considerably.
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