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Hotels, spas spared entertainment duty
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by: Spas
MUMBAI: In a bid to create better tourism infrastructure in Maharashtra, the state cabinet on Wednesday waived entertainment duty for upcoming
hotels, resorts and spas for a specific period, depending upon their location. Ironically, the waiver comes at a time when the revenue department is struggling to meet its targets due to the economic slowdown.
The state had given a similar entertainment duty exemption a few years ago to multiplexes to develop the organised retail industry.
The proposal passed on Wednesday extends the entertainment duty exemption to star hotels, heritage hotels, guest house, health and wellness spa, service apartments, water sports park, handicraft exhibitions, convention centres, adventure sports firms, housing boats, acquariums, ropeways and golf course. The waiver of entertainment duty, charged at the rate of 25% on the entry fee at a hotel, is part of the incentives underlined by the tourism policy 2006.
Officials said the new projects will be divided in A, B and C categories depending upon their location. All projects in municipal corporations of Mumbai, Navi Mumbai, Thane, Pune and Pimpri Chinchwad will be in `A' category. Projects in remaining municipal corporations of the state will be in `B' category while district-level resorts and parks will be in `C' category.
A senior revenue department official said entertainment duty will be waived for five, seven and 10 years respectively for projects coming up in A, B and C categories respectively. "These projects will have to be in business for double the period of exemption. For instance, hotels and projects in `A' category will get exemption for five years but will have to run the show for at least 10 years, else entertainment duty will be collected with retrospective effect,'' said the revenue official.
The state had framed the new tourism policy back in 2006 with the intention of earning higher revenue by attracting increased tourist traffic in Maharashtra. As part of the policy, the tourism department had sought a host of tax exemptions, higher FSI and indirect subsidies from various departments of the government. Last month, the state government decided to relax stamp duty and registration charges for upcoming projects.
Asked about the revenue loss due to the waiver, officials side-stepped the issue, stating that the impact will be realised only when new project developers actually seek benefits under the tourism policy of 2006. The revenue department had earned Rs 211.97 crore from entertainment duty in 2006-07 and got another Rs 254.26 crore in 2007-08. However, the department had collected only Rs 142.59 crore till October 2008 and there has been a marginal dip in revenues since then.
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