Hotel association of India submits pre-budget memorandum

Mumbai: The Hotel Association of India has submitted their pre-budget memorandum.

Citing the contribution of the tourism sector in the growth of national economy, the association would like to see at least some of the following as part of the Union Budget 2008-09.

  • Direct tax benefits to accelerate the pace of construction of more hotel rooms, the hotel industry therefore needs to be declared an infrastructure industry under Section 80 I/A of the Income Tax Act 1961.
  • Extension of the benefits from Union Budget 2007-08, namely the tax holiday of 5 years that was extended to two, three and four star hotels in the national capital region (NCR), to hotels of all categories across the country.
  • With respect to the amalgamation or merger of hotels, the association would like to see the continuity to hold assets of the amalgamating company, which should be confined to 50 per cent  of book value in order to make the amalgamation viable. Additionally, it would also like to see the continuance of business of amalgamating companies should be reduced from five years to two years to facilitate effective re-organisation.
  • Contributions to superannuation funds should be removed from the purview of the fringe benefit tax (FBT).
  • The effective rate of the Dividend Distribution Tax is 16.995 per cent, inclusive of surcharge and education cess. The association recommends a removal of this section, as it results in double taxation.
  • Exclusion of hotels from tax deduction at source (TDS), as payment made to hotels are not the payment of rent per se.

To see the full memorandum, click here.