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Delhi to broaden luxury tax net; hotel rooms and spas may go dearer

Wednesday, June 6, 2012, 14:00 Hrs  [IST]
By HBI Staff | New Delhi

The Delhi Tax on Luxuries (Amendment) Bill, 2012 introduced by Sheila Dikshit, Chief Minister (CM) of Delhi, in the Assembly yesterday, 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 into the luxury tax net services like banquet halls, gymnasiums, health clubs and spas.  

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.

 
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