Steps Taken By Government for development of Hotel Industry

GoI has taken several steps to boost development of hotel accommodation in India. Some of the important steps taken in the recent times are:-

  • Hotel and Tourism associated industry has been announced as high priority industry and FDI up to 100%, under the automatic route is permitted in ‘Hotels & Tourism Sector’, subject to applicable laws/regulations, security and other conditions.
  • To boost the increment of hotels, on the request of Ministry of Tourism, a 5 Year Tax Holiday was declared in the Budget of 2008-09 for 2, 3 & 4 star hotels that are based in districts which have UNESCO declared ‘World Heritage Sites’ excluding the revenue districts of Mumbai and Delhi. The hotel should be built and commence operations during the period April 1, 2008 to March 31, 2013.
  • The GoI has also declared the expansion of Investment Linked Tax incentive under Section 35 AD of the Income Tax Act to new hotels of 2-Star Category and over throughout the nation.
  • RBI has also put out reviewed Guidelines on Classification of exposures as Commercial Real Estate (CRE) Exposures. Thus, RBI has separated exposures to hotels outside the CRE Exposure.

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