Vinay Phadnis, CMD, Phadnis Infrastructure

Finance Minister, Pranab Mukherjee has tabled a good budget that meets various expectations from industry and common taxpayer. Though the increasing excise duty on petroleum products will lead further price hike, the budget successfully tried to woo taxpayers by offering new taxation slabs. The hotel industry, hit by economic downturn and terror attacks, was expecting infrastructure status which is overlooked. But the Finance Minister tried to boost the prospects of this segment with granting investment linked deduction for two-star categories and above. Increasing depreciation rate for hotels to 20 per cent is also a wise step.

The infrastructure segment is definitely boosted by a significant increase of 46 per cent on infrastructure projects provision. The allocation for road transport has increased by over 13 per cent from Rs. 17,520 crore to Rs 19,894 crore. The emphasis on urban development was very much expected in this budget as it play key role in accelerating growth rate.

Pradeep Jain, Chairman, Parsvnath Developers Limited

I personally feel that Union Budget 2010-11 was for aam-admi, it is good for each and every individual in the society, the budget is supportive for the tax payers as the extension of limit will help in reducing burden on individual tax payers. I am sure that the budget tabled today will induce renewed sense of optimism over the country’s growth.

The budget is good for infrastructure sector, food processing units and the large support to the rural development including PPP projects, education and health. Partial roll back of excise duty on cement and cement products is a welcome move as it will help in reducing the input cost thereby making the final product economical.

Navin M Raheja , Managing Director, Raheja Developers Limited

Union Budget 2010-11 presented by the Finance Minister is good for the Indian economy. We appreciate the decision of Finance Minister to continue the stimulus package. The budget is focused on the overall infrastructural development of the country including the rural sector. But the Finance Minister has not considered the real estate sector’s major recommendations such as status of infrastructure to the industry, extension of tax exemption/tax rebate under section 80 IB up to March 2011, ECB for real estate etc.

Param Kannampilly, CMD, Concept Hospitality

The central government has given a good incentive to the hospitality industry in the Union Budget 2010-11 with provision of investment linked deduction for two-star and above category hotel development in the country. This is definitely a progressive move by the government as it aims to boost hospitality and tourism growth in India. However, financial incentives are investment based. How much will the government incentivise hotel funding will only be clear over a period of time. However, the overall increase in the budget outlay for infrastructure to 46 per cent will help the industry in the long-run.

Jyotsna Suri, Chairperson and Managing Director, The Lalit Suri Hospitality Group

The Finance Ministry has tried to do a balancing act in this budget, where the tax incentives for aam aadmi (common man) are good and importance to the education sector has been restored by increase in budgetary allocation. With specific reference to our industry, there has been no major announcement, our incessant demand of infrastructure status for hotels, Convention Centres and Airlines have not been met. Even the roll out of GST has been pushed to next year. But, we welcome the move on investment linked deduction provided to new hotels of two-star category and above. However, we will have to read the fine print to know its proper impact.

Anurag Mathur, Managing Director, Cushman and Wakefield

The Finance Minister presented a realistic yet progressive budget which provides long-term goals for growth, with special focus on reforms and fiscal stability. The Union Budget 2010 – 11 can be termed as benevolent for the masses through revised direct tax norms and other popular measures. Even though there are no major initiatives towards the real estate sector, several benefits can be culled from announcements related to infrastructure, finance sector and urban development. The thrust on unconventional sectors like power, food processing and education are likely to play a major role in growth of real estate sector.

In order to boost tourism sector, the benefits of investment linked deduction under Section 80 IA (Infrastructure status) is extended to new hotels of two-star category and above across India. This will enable investments in the hospitality segment and boost supply in the organised sector. It aims to provide support to the hospitality sector in expectation of growth in tourism, both business and leisure travel.

Keshav Baljee, President and Co-Promoter, Royal Orchid Hotels

“After a difficult year, it is heartening to note that Finance Minister, Pranab Mukherjee has provided investment-linked deduction to new hotels. This will indeed spur the development of new hotels across the country and bridge the demand-supply gap that currently exists. While this is positive, we are saddened that long-standing requirements like that of infrastructure status, tax rationalisation and the re-establishment of the depreciation rate to 20 per cent have not been listened to. Hospitality is a sector that has immense employment potential and we hope the government will recognise this soon”

SP Jain, Chairman, Pride Group of Hotels

“The government should have extended the benefit to one-star hotels as well; hence, providing the incentive to the entire hospitality industry. While certain deductions in proportion to investment will be beneficial to the hotel owners while paying tax, the industry remains sceptical about the government’s announcement. The statement lacks clarity and complete information on the amount of deductions in income tax given to the developers is missing. Earlier, this was termed as ‘Investment Allowance.’

Sudhir Sinha, President and Chief Operating Officer, Best Western India

For the hospitality industry, the Union Budget 2010-11 too has turned out to be a disappointment, which in all had great expectations from Finance Minister Pranab Mukherjee. The budget has no reference to the hospitality industry and absolutely no stimulus has been announced for tourism and hospitality, which have both been badly affected by the economic meltdown. We feel dejected due to the government’s apathy towards the industry. The budget failed to grant infrastructure status to the hospitality business which we were hoping since long. Even the pending issue of depreciation on hotel buildings has remained unchanged. The budgetary demands of the travel and hotel industry were that the sector be given an infrastructure status, depreciation rate to be increased to 20 per cent which would facilitate better cash flows, extension of 100 per cent tax holiday on newly constructed hotels to ten years instead of five years and there was also an expectation that earnings in foreign exchange be exempted from service tax.

In addition to this, we wished for the government to realise that tourist arrivals in the country will not just help improve revenues for the tourism and hospitality industry but also tourist arrivals will improve tax revenues for the government. For this, the government need to consider visa on arrival, tax benefits for infrastructure development, civic infrastructure at major tourist destinations, etc.

Rajindera Kumar, President, Federation of Hotels and Restaurants Association of India

“This move of the government will aid the upcoming hotel projects which will primarily enjoy the subsidies, provided they are commissioned after April 1, 2010.”

M P Purushothaman, President, South India Hotels & Restaurants Association (SIHRA)

The investment-linked tax concession proposed for two-star hotels and above is the only consolation in the Budget presented by the Finance Minister. But our long-pending demands for infrastructure status and rationalisation of taxes have been overlooked once again. There is nothing much for the industry in this Budget.

Vijay Pande, President, Hotel and Restaurant Association of Northern India (HRANI)

Our policy makers are yet to recognise and appreciate the importance of tourism industry in the overall development of the country. They must gain experience from other countries who have achieved higher growth through investments and incentives in the tourism sector. The investment-lined tax incentive proposed in the budget is a welcome step. We appreciate the efforts of Kumari Selja, Union Tourism Minister in this connection.

Manbir Chowdhary, President, Hotel & Restaurant Association of Haryana (HRAH)

We cannot think that all our demands will be met in one go in a country of the size of India. Even though, the proposed investment-linked tax concession for two-star and above hotels is short of infrastructure status that the industry has been demanding for long, the proposal will help new hotel projects across the country. Earlier, it was confined to the projects in the National Capital Region (NCR). The efforts and leadership of Kumari Selja, Union Tourism Minister in this connection is appreciable.

We also have to correlate this with few other proposals in the Budget as well. The proposal to relax Foreign Direct Investment rules will also benefit the hospitality industry in the coming days. The move to give licences to foreign banking institutions will also make credit availability more competitive for investors in the country.

Vivek Nair, Vice Chairman and Managing Director, Hotel Leelaventure Ltd

“The hotel industry was expecting Infrastructure Status, which has been overlooked in the Budget. Instead, the Budget has proposed an investment linked deduction under Section 35AD for commencing a new hotel of two-star or above category anywhere in India on or after April 1, 2010. The capital expenditure, other than land, goodwill and financial instrument, would be allowed as a deduction from the taxable income of the assessee. A hotel takes around three years to construct and commence. Thus a hotel commencing operations in 2010-2011 has been under construction for the last two years and capex has been incurred already. This Section 35AD gives benefit only to capital expenditure incurred in 2010-2011, which deprives the hotel the benefit on cost incurred till date. Also, interest cost during construction period, which forms a major portion of the hotel cost, should also be given this benefit. In an overall analysis, this benefit under Section 35AD is a step in the right direction and we consider it as a precursor to infrastructure status.

Amit Dahanukar, Chairman and Managing, Director, Tilaknagar Industries Ltd

The Budget seems to be a balanced one. While no rebates were given to the Indian Alcoholic Beverage Industry, at the same time no additional taxes have been levied. For the IMFL sector - most of the major taxes are governed by the Budgets presented by the state governments; hence, it will be a wait and watch to see the state finance Budgets. We hope that the biggest revenue earning industry for the exchequer, is well catered to and incentives for additional investments in such sectors are considered positively. On the corporate front, the reduction of surcharge on Corporate Tax by 2.5 per cent is a welcome. The revision in income tax slabs is also a welcome step in the right direction, as it is going to help all employees to a great extent.

H A MISHRA, Managing Director, M/s Foodesign Systems Associate Pvt Ltd, Consultants – Hospitality Industry

The Budget seems to be a balanced one. While no rebates were given to the Indian Alcoholic Beverage Industry, at the same time no additional taxes have been levied. For the IMFL sector - most of the major taxes are governed by the Budgets presented by the state governments; hence, it will be a wait and watch to see the state finance Budgets. We hope that the biggest revenue earning industry for the exchequer, is well catered to and incentives for additional investments in such sectors are considered positively. On the corporate front, the reduction of surcharge on Corporate Tax by 2.5 per cent is a welcome. The revision in income tax slabs is also a welcome step in the right direction, as it is going to help all employees to a great extent.