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Rajasthan cuts taxes on heritage hotels
Shekhar Niyogi, reporting from India International Travel Mart, Bengaluru, July 21, 2014

MOST heritage hotels in Rajasthan will pay less value-added tax (VAT) this summer season as part of plans to boost tourism and encourage further growth of such accommodation, announced the state's chief minister Vasundhara Raje last week.

Taxes on the basic category of heritage hotels, offering between 10 and 15 rooms, are down from 14 to five per cent with immediate effect, while higher category heritage hotels, with 20 to 30 rooms, will pay four per cent instead of five.


There are more than a hundred heritage hotels that fall within the basic category, which are also priced lower than the large royal palaces that have been converted into ultra luxury hotels.


Taxes will also be waived for guesthouses and hostels with fewer than five rooms.


Heritage hotels falling in the grand category that come with 50 to 100 rooms, however, will pay 10 instead of eight per cent luxury tax.


Randhir Mandawa, general secretary of the Indian Heritage Hotels Association, observed that average occupancies for heritage hotels stood somewhere between 35 and 40 per cent, as compared to 55 per cent for contemporary hotels. “The reduction in VAT is expected to benefit a large number of heritage hotels in the state and boost tourism.”


Minar Travels Jaipur’s director, Madan Kak, predicted more storied properties would be converted to heritage hotels as a result. “Tax breaks will always help, but the assurance of minimum service and infrastructure delivery has to be guaranteed by the owner before he can turn such properties into hotels.”


Separately, Raje also announced a slash in VAT on turbine fuel from 20 to five per cent, which would be helpful in attracting more flights to the state.

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