Partying out would become more expensive for the residents of the city with the UT Administration levying 4 per cent luxury tax on banquet halls and hotels in respect of the luxuries provided by them. This would imply that renting hotel rooms or booking banquet hall for a party would burn a hole in the pockets of the customers.
At present there is 12.5 per cent value added tax and 3.09 per cent service tax on these services. The additional 4 per cent tax would further burden the customers. The decision has received criticism from the hoteliers in the city. Considering that most of the hotels also have banquet halls that are rented out for parties and functions the tax would have a direct bearing on the residents of the city as well as travelers.
Ankit Gupta,General Secretary,Chandigarh Hospitality Association says,The decision of the Administration would burden the hoteliers as well as the customers. A majority of the clientele of the hotels are corporates who travel to and from the city quite frequently. We have annual agreements with the corporate clients. Till December last year there were no taxes on renting rooms. When service tax was introduced the cost was borne by the hoteliers as the corporates refused to pay and the additional cost was passed on to the hoteliers.
He further said that there is not much clarity on how we would be required to alter the plans they offer. The companies would ask the employees to travel less. The parties that the customers arrange at the banquets would also get more expensive.
There are around 1500 hotels in the organised sector where rooms are given out on rent. Most of the hotels have banquet halls that are generally booked for parties. The hoteliers had earlier met the UT Finance Secretary asking for reconsidering the decision.
Arvinder Pal Singh,the president of the Hotel and Restaurant Association while ruing levying of another tax said that this year this is the third tax that has been levied by the Administration. It affects the customers who visit the hotels as the tax gets passed on to them.
Hotelier Atul Grover also rapped the additional tax.