Tax holiday deadline extended for CWG projects

The tourism ministry today asked the finance ministry to extend the benefits of the five-year tax holiday for under construction hotels in and around Delhi to July 31, 2010, instead of the earlier deadline of March 31.

According to sources, the decision has been taken and around 25 hotels would benefit from this move and as a consequence the government would have access to 2,000 more rooms for the Commonwealth Games.

"Although these hotels would have been used for the Games they would not have got the tax benefit if the deadline was not extended, as the previous order required them to be operational by 31st March, 2010. Commonwealth Games hotel projects had slowed down following the overall global economic recession," said a statement from the tourism ministry.

With the announcement coming approximately 200 days from the start of the Commonwealth Games, the government hopes the move would encourage the growth of new hotels in the national capital region and help meet the accommodation requirements of the Game.

The tax holiday is available to 2, 3 and 4-star category hotels and convention centers in Delhi and NCR, including Faridabad, Gurgaon, Noida and Ghaziabad.

Besides hotels, accommodation is also being made available in Delhi University hostels, DDA flats, guest houses and bed-and-breakfast establishments.

Hockey WC gets tax waiver

After giving tax breaks to Commonwealth Games, Delhi government has decided to waive off taxes for the Hockey World Cup to be held from February 28- March 13 at the Dhyan Chand National Stadium.

The government has decided to waive off all revenue collected as entertainment and luxury tax from the organisers of the tournament. This will cost the government exchequer Rs 6 crore.

Hockey India representatives had met Delhi Chief Secretary, Rakesh Mehta, earlier this month demanding waiver of entertainment tax on tickets and luxury tax on hotel rooms to be booked for delegates.

Earlier this month, the Delhi cabinet had waived off luxury tax to the tune of Rs 30 crore on hotel rooms booked by the Commonwealth Games Organising Committee for athletes, delegates, sport physicians and international mediapersons.

Incomplete hotels to loose out of tax holiday...!!

Major hospitality chains planning to open properties in the national capital region (NCR) before the Commonwealth Games (CWG) in October could lose out on the five-year tax holiday benefit if they are not able to throw open the entire room inventory before the sporting extravaganza.

According to tourism secretary Sujit Banerjee, the ministry would oppose full tax holiday to companies not closing projects on time. “How can hotels open partially and yet get the tax-holiday. They will have to come to us for registration and classification, and we will not allow such a thing”.

A host of hospitality majors, domestic and foreign including the Taj Group, InterContinental, Hilton, Starwood Hotels and Resorts have projects in the pipeline, which are slated for launch before the Commonwealth Games. While InterContinental group plans to open its Crowne Plaza in New Delhi before the Games, its two other properties would be operational in 2010 but not necessarily before the CWG.

“By opening partially, hotels will not only gain the benefit of the five-year tax holiday (except for five-star properties which are outside the ambit of the scheme), but will also get their licences fast as the ministry is under immense pressure to get the required rooms ready,” said a hospitality consultant on the condition of anonymity. The tourism ministry is also pushing for an extension of the tax-holiday till July 2010 from the earlier March deadline (Click here to read previous report).

According to market estimates, only 50% of the total proposed room inventory will be ready before the Games. Though some hotel majors maintain they will launch full operations of their properties, sector analysts and experts are of the opinion that ground realities are different and as projects are met with delays, owners are planning to go for only partial openings.

Request to extend tax holiday for CWG hotels

Indian tourism ministry has urged the finance ministry to extend the benefits of the five-year tax holiday for budget hotels under construction in the national capital region (NCR) up to July 31, 2010. The current deadline is March 31, 2010.

Currently, there are many projects going on in Delhi in preparations for Commonwealth Games. Looking at the macro-economic situation over the past year, most of the hotels will take a little longer to complete.

Extending the tax holiday would be an incentive for hotels to speed up the process of development and start operations soon, adding to the country’s preparedness for the Commonwealth Games.

The five-year tax holiday for budget hotels was introduced to attract hospitality chains to build more hotels in the NCR region before CWG 2010. However, the economic downturn put a spanner in the development of a majority of properties raising concerns of a shortage of rooms during the Games, which are expected to attract around 1,00,000 tourists from across the world. According to estimates, there is a requirement of around 40,000 rooms in the NCR region to host the guests.

The tourism ministry has also urged the finance ministry for “non-inclusion of inter-state passenger tax, state road tax and toll tax in GST as a result of which seamless travel and uniform road tax would not be possible”.

Stamp duty, vehicular tax and toll taxes are part of the exemptions demanded by the empowered committee of state finance ministers, which is negotiating the GST rate and structure with the centre. States receive a consolidated Rs 10,000 crore annually from vehicles, according to the estimate of the 13th Finance Commission task force on GST.

The ministry has also demanded the restoration of Budget grant to Rs 1,000 crore, which was reduced to Rs 950 crore in the revised estimates of 2009-10. The ministry has also reiterated its demand to allow the exemption of 50% of the profits earned from the services provided to the foreign tourists from tax, and further exemption of 50% of the profit it it was re-invested in tourism sector. This benefit was discontinued from the financial year 2005-06 and the revivals of the benefits would set a path of growth for building up much needed tourism infrastructure in the country.

Tax holiday for Hotels hosting Commonwealth Games's guests

The Delhi government Monday granted exemption from payment of luxury tax to hotels providing accommodation to delegates and technical experts during the Commonwealth Games this year.

After a cabinet meeting here, Delhi Chief Minister Sheila Dikshit said it is estimated that the amount of exemption in luxury tax will be around Rs. 300 million.

The exemption will be provided for a month (from Sep 16 to Oct 16) on hotel accommodation booked by the Commonwealth Games Organising Committee for delegates from the Commonwealth Games Federation, member countries of the Commonwealth Games Associations, technical experts of International Sports Federations and broadcasting/media right holders for the games.

Dikshit said the decision has been taken as per the 'Host City Contract' which says that the host city will use all reasonable endeavours to minimise the imposition of taxes on the import of supply and equipment required by the Commonwealth Games Federation, Commonwealth Games Associations, and accredited representatives.

'The taxes mean all taxes - duties of the host country, the host state and host city. The organising committee will have to provide a detailed list of delegates/technical experts,' she said.