Five Stars to Get Five Years Tax holiday

The Associated Chambers of Commerce and Industry (ASSOCHAM) has advocated to the government a five year tax holiday for all hotels (including the five star hotels) to boost up their capacity expansion ahead of the 2010 Commonwealth Games

In the 2007-08 budget, the government had announced a five year tax holiday scheme for two, three and four-star hotels and convention centers with a seating capacity of not less than 3,000.

ASSOCHAM has said that this must be extended to all categories of hotels including five-star hotels to ensure adequate capacity expansion to cope with the tourist influx during the Commonwealth Games. It came in view that there have not been enough expansions in Five Star hotels which is a cause of worry as a majority of the tourists are likely to stay in these hotels.

"Therefore, to speed up these works, the five-year tax holiday scheme needs to be extended to this (five-star hotel) category," the industry lobby said.

ASSOCHAM secretary general D.S. Rawat said the hospitality industry should be extended the “infrastructure sector” status as it is capital-intensive, with five-star hotels requiring capital investments ranging from Rs.300 crore to Rs,500 crore (Rs.3 billion to Rs.5 billion). He said that the chamber has forwarded a proposal in this regard to the finance ministry.

According to the associations estimates of 70 new projects in the next two years is going to add around 19,000 rooms in the country.

In light of the hotel industry being one of the prime foreign exchange earners in India, and a service export industry the association has proposed to exempt the industry from service tax.