The Delhi Tax on Luxuries (Amendment) Bill, 2012 introduced by Sheila Dikshit, Chief Minister (CM) of Delhi, in the Assembly on Wednesday, with an objective to broad-base the luxury tax net in the state will make hotel rooms and other luxury indulgences including health clubs, spas, etc., dearer. The new bill proposes to bring services like banquet halls, gymnasiums, health clubs and spas into the luxury tax net. Introducing the bill, the CM said that these facilities are used and availed by the ‘affluent strata’ of the society and needed to be brought under the ambit of the luxury tax. As per reports, the CM also said that the decision of the government to lower the threshold limit from Rs 500 to Rs 1000 for luxury tax from 12 per cent to 10 per cent in June, 2009 has led to considerable reduction in tax collection. The new bill also proposes to revise the threshold limit for luxury tax for hotels from Rs 1000 to Rs 750. Although the government is silent on the exact quantum of the luxury tax to be levied, there are reports that it will be 15 per cent in excess of the VAT. Banquet halls, gyms and spas with an annual turn over of Rs five lakh will be brought under the ambit of the bill. Speaking to India Hospitality Review earlier during the budget 2012-13 release, Jyotsana Suri, CMD Lalit Suri Hotel Group, had said, “We are (already) heavily burdened with multiple taxes like Luxury Tax, VAT and different states levying different taxes. And now there is further increase in Service Tax and Excise Duty.” The proposal of broadening the luxury tax net comes as yet another shock to the hospitality industry demanding service tax cuts and infrastructure status for long. Though the the budget tried to play safe by doing minor adjustments here and there, this new proposal will throw the equation out of balance furthering burdening the industry that is trying hard to stand on its feet on its own,” said a senior industry official.
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