No luxury tax on hotels with tariff less than Rs 1,500

The Delhi Assembly on Tuesday passed a legislation removing luxury tax for budget travellers using hotel rooms with a daily tariff of less than Rs 1,500.

“A person who uses a hotel room with a tariff of less than Rs 1,500 cannot be said to be enjoying luxuries,” said Deputy Chief Minister Manish Sisodia, while concluding a discussion ahead of passing the Delhi Tax on Luxuries (Amendment) Bill, 2016.
“A person using a hotel with less than Rs 1,500 is a common man. Tax should not be imposed on services used by a common man,” said Sisodia.

With the Amendment, the luxury tax collected by the Delhi government will no more be applied on rooms with a daily tariff between Rs 750 and Rs 1,499.

Earlier, the luxury tax was collected from even those travellers who used rooms with a tariff of at least Rs 750.

Sisodia said the increase in the threshold limit for luxury tax from Rs 750 to Rs 1,500 was a step towards a simplified tax regime.

The decision will reduce burden on citizens and tourists and make it easy for small hotels.
“The move may have an implication on the revenue collected but there would also be benefits in terms of saving of the administrative cost incurred by the government in collecting small amounts of luxury tax from hotels offering rooms at Rs 750 or Rs 1,000,” he said.

The number of hotels charging Rs 1,500 and above tariff in the city is less and a smaller team of the Luxury Tax department is required to collect the tax. “There are indirect benefits behind this move,” he said.

During the discussion, Kasturba Nagar legislator Madan Lal said the move would help low-budget travellers who use the city for transit.

Rajender Nagar legislator Vijender Garg said traders coming to city would also benefit from the decision to waive off luxury tax on hotels rooms costing less than Rs 1,500.