India mulls tax breaks for hotel sector
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The tax-holidays for hotels ranging form five-star to budget, are to be discussed next month, an Economic Times report said. Once approved, the proposal would help alleviate the severe capacity crunch that is hindering tourism development in India.
The report said India faces a shortage of 150,000 rooms. Foreign arrivals into India increased 85 percent to 4.4 million last year. This figure is double that of the 2.4 million recorded in 2002.
With high occupancy rates due to the acute room shortage, hotel room rates in India have hit the roof over the last three years, even among lower-star categories, the report said.
“Hence tax sops have been proposed to kick-start rapid development of hotels to take on the influx of tourists into India,” a government official was quoted saying.
Fresh tax concessions were allowed in the Budget 2007-08 to promote infrastructure facilities. That was to help meet the requirement of 20,000 additional hotel rooms for the Commonwealth Games in 2010.
According to the newspaper, the government now feels that the same concessions should be extended to hotels across the country to meet shortage of rooms.
Tourism has been identified as an important sector for increasing the country’s foreign exchange earnings.
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