India’s Hotel Association-Infrastructure status
Hotel Association of India, in its pre-budget memorandum, recommended that the hotel industry should be granted full infrastructure status under Section 80 I/A.Â
It said that to accelerate the pace of construction of hotel rooms, it is essential to grant full infrastructure status to hotels. Hotels should be bought on par with other infrastructure projects like Airports, Highways and Power Projects.
According to the association, hotel industry should be made eligible on par with the other infrastructure industries to get the benefits of 5 years of Corporate Tax Holiday and deduction of 30% profits for the purpose of tax during the next five years
Once the industry is given the infrastructure status, it will also get the benefit of subscription  in  equity  shares  or  debentures  issued  by public  limited company  exclusively  for  an  infrastructure  facility  being  eligible for deduction equal to 20% of the amount subscribed.
As the amended Section 72 A of the IT Act, includes hotel industry under its ambit to set off of accumulated loses and depreciation on amalgamation to help the loss making hotel companies, the association has recommended that the continuity to hold assets of the amalgamating Co. should be confined to 50% of the book value in order to make the amalgamation viable so that recycling is possible and assets are procured in order to keep up with latest technology.
Further it recommended that the continuance of business of amalgamating companies should be reduced from five years to two years to facilitate effective reorganisation.
Another recommendation made by the Association is that for the amendment in the Section 32 of the IT Act to restore the depreciation rate to 20%, Æ’sÆ’nwhich was scaled down to 10% in the year 2002. It also recommended that the additional depreciation applicable to Plant & Machinery u/s 32 1 (ii a) should also be allowed to hotels which have to make heavy investments in plant and machinery.
On Fringe Benefit Tax (FBT), the Association has demanded that the contributions to superannuation funds should be removed from the purview of FBT as existing superannuation schemes would become unviable in future; the effective tax to be borne by corporates would be more than 40%, since FBT is not tax deductible; and employee receiving his pension from the fund would be paying his regular tax on the same. It should not be made applicable to loss making companies, which primarily
do not pay any base tax, the association said.
Other recommendation includes abolition of Dividend Distribution Tax and exemption from Minimum Alternative Income Tax (MAIT)
Â
