Tax holiday extended to boost Games hotel projects

The Union Ministry of Finance has agreed to extend the Five-Year Tax Holiday scheme to Commonwealth Games hotels till July 31.

A request for the same was put in by the Tourism Ministry in February this year and in the recently announced Union Budget, the Finance ministry agreed to the demand.

The scheme earlier applied to hotels that would be completed and operational by March 31.

The Five-Year Tax Holiday is meant for new two, three and four-star hotels coming up in the National Capital Region to accommodate visitors during the Games. The scheme gives special tax discounts for the next five years if hotels complete construction by July 31.

The scheme was introduced on April 1, 2007, and hotels were expected to finish construction by March this year. The global meltdown, however, put a break on the work and hoteliers started demanding extensions.

Welcoming the decision, Tourism minister Kumari Selja said, “The announcement of the government during the Budget speech has set an economic environment that is conducive for tourism and hospitality growth in the country.”

After the recent announcement, the scheme can be availed by two, three and four-star hotels and convention centres in the National Capital Territory of Delhi and the districts of Faridabad, Gurgaon, Gautam Budh Nagar (Noida) under Section 80-ID of the Income Tax Act.

Officials said the incentive has been extended by the government to encourage the completion of the Commonwealth Games hotel projects. The ministry estimates 40,000 rooms in budget hotels, guesthouses and under the Bed & Breakfast scheme would be required during the Games.

After hastening the process of procuring more hotel rooms, the ministry announced in February that 7,307 of 10,540 rooms were complete under the “definite” rooms category.

To fill the gap of rooms required, Haryana and Uttar Pradesh are also chipping in. While Haryana will provide 6,700 rooms, the Delhi Development Authority will provide 2,300 rooms while 2,000 will be given by Uttar Pradesh.

In addition, nearly 11,000 rooms would be available in guesthouses in Paharganj and Karol Bagh and another 3,000 under the Bed & Breakfast scheme in Delhi and Haryana.