The hospitality and tourism sector has demanded a rollback of service tax imposed on them by the Government in the Union Budget 2011-12. The industry, however, assured that a drastic step like a strike won't be taken, unlike the retail and garment industry.

“We do not intend to go on a strike. We are a responsible industry and want to protest in a dignified manner,” said Bharat Hotels' Chairperson and Managing Director, Ms Jyotsana Suri.

Talks held

“If we go on a strike for even three days, the entire country will come on a stand still...the new taxes will impact the growth of the industry,” Asian Hotels Managing Director, Mr Sushil Gupta, added.

The industry has already met the Finance Ministry officials following the Budget and has put their case in front of them. “We have met a lot of people in the government, including officials in the Finance Ministry. Even the Tourism Minister has met with the Finance Minister to take up our request,” Ms Suri said, adding that the Government had said it would look into the issue.

Restaurants' dilemma

Restaurant owners added that the increased burden of 3 per cent service tax will have to be passed on to the consumer.

“A consumer will be forced to pay about 25-30 per cent taxes on the total bill value. Given the high rate of food inflation, there will be no choice but to pass on the burden of the increased taxes on consumers,” said the National Restaurant Association of India President and Nirula's Managing Director, Mr Samir Kuckreja.

According to industry estimates, the hospitality sector earned Rs 64,000 crore of foreign exchange in 2010. Ms Suri said that the hospitality sector has a potential to create 37 million additional jobs in the next ten years.

“However, with the additional tax burden this will be reduced to approximately 20 million which translates into a loss of around 1.7 million jobs per year” Ms Suri added.

Related Topics
comment COMMENT NOW