Give infrastructure status to hotels

Give infrastructure status to hotels
Times of India, January 13, 2010, Page 24

NEW DELHI: Reiterating its demand for infrastructure status for hotels, the tourism ministry has sought inclusion of hotels as infrastructure under Section 80-IA of the Income Tax Act in the forthcoming Union Budget. This is likely to give new hotel projects a major boost allowing companies to reinvest their profits.

According to sources, if this incentive is given, all new hotel projects will be able to avail the benefit of 100% deductions with respect to profits and gains for a period of 10 years. The measure will bridge the shortfall of hotel accommodation in next five years and could even make India a more competitive destination in terms of room tariffs.

The tourism ministry is also considering revival of 80 HHD of Income Tax Act for the sector. This tax incentive could be useful to encourage investments in hotel sector. According to sources, other sops that are likely to make it to the tourism ministry’s wishlist for the Union Budget include deemed export status for earnings of inbound tour operators and bringing cruise operators at par with tour operators by extending 70% abatement of service tax.

In order to provide relief to tour operators hit by the global economic slowdown, the ministry may propose foreign exchange earned by inbound tour operators be considered as deemed export and full service tax exemption be provided to them so that they get reimbursement in service tax at par with other exporters.

Seeing the initiatives taken by the government to give a boost to cruise tourism in India, the ministry also hopes that cruise operators be brought at par with tour operators by extending 75% abatement of service tax. This, if accepted, will give a boost to cruise tourism which is still in a nascentstate.