The more the merrier

New Delhi, Sept. 10: Hotel owners want the government to relax land laws so that they can set up shop at any available commercial land, be it a closed factory, cinema hall or even a farmhouse.

India has one of the highest room rentals in Asia because of a mismatch in the demand and supply of hotel rooms. In a presentation to tourism minister Ambika Soni, the industry has asked for changes in land-use laws and tax sops.

“Hoteliers should be allowed to build hotels on any land available for commercial use. At a time when rooms are scarce, why do we have such stringent laws? Why can’t somebody set up a hotel at a site which may be initially a manufacturing facility or a cinema hall as long as the land is used for commercial purposes,” said Subhash Goyal, president of the Indian Association of Tour Operators (Iato).

The Commonwealth Games will take place in the country in 2010, and 1.5 lakh new hotel rooms will be needed to accommodate tourists. The hospitality industry has also asked for clearance to add two to three storeys to existing hotels.

“Keeping in view the severe shortage of rooms, it is not a bad idea to allow existing hotels to build additional floors. This is one way of helping meet the room requirements within a short span of time,” said Tarun Thukral, COO of Le Meridien, New Delhi.

Addressing the issue of luxury tax, the industry said state governments should charge tour operators not on the printed tariff but on the real tariff levied. “Why should the company be taxed on a higher tariff while tourists are charged lower rates,” said a tour operator with Delhi-based Creative Travels.

The industry wants a hike in the rate of abatement for calculating the service tax payable by operators of packaged tours.

Tour operators registered under Iato said the rate of abatement should be raised to 90 per cent.

However, the Central Board of Excise and Customs on Thursday hiked the rate of abatement from 60 per cent to 75 per cent.

“As a result of the notification, the tour operator is required to pay service tax only on 25 per cent of the gross amount charged on such package tour,” said an official release issued by the government last week.

Under the regulations, services provided by operators during a tour are taxed under ‘tour operators service’.

Earlier, the operators were required to pay service tax on 40 per cent of the gross amount, including cost of accommodation, food, transport, tourist guide, entry to monuments and other expenses.

The government has issued a notification after a presentation made by Soni to the advisory committee on service tax abatement in mid-July.