Extend tax holiday to five-star hotels: Assocham

In the 2007-08 budget, the government had announced a tax holiday scheme for five years for the two, three and four-star hotels and convention centres with a seating capacity of not less than 3,000.

This holiday needs to be extended to all categories of hotels including five-star hotels so that their capacity expansion will take place at desired speed to accommodate large number of travellers to India during the 2010 games, Assocham said in a statement.

The chamber said the infrastructure expansion of five-star hotels, especially in Delhi and the National Capital Region (NCR), where majority of tourists are likely to stay during the games, are not taking off.

"Therefore, to speed up these works, the five-year tax holiday scheme needs to be extended to this (five-star hotel) category," the industry lobby said.

Assocham secretary general D.S. Rawat said the chamber has forwarded a proposal in this regard to the finance ministry.

According to Assocham estimates, around 70 new hotel projects will add 19,000 rooms in the next two years in the country.

In the NCR region alone, 27 new hotels are coming up with around 4,900 rooms in various categories over the next three to four years.

Radisson Hotels has already set up a hotel in Noida and other players like JP Group, InterContinental, Clark Group, Chatwal Group are also planning to build 250-300 rooms properties in NCR.

The chamber has also proposed to exempt the hotel Industry from service tax as it is one of the prime foreign exchange earners and is recognised as a service export industry.