Luxury Tax

SANDEEP BAWEJA (Querist) 17 December 2009 This query is : Resolved
Whether the Luxury Tax is applicable on A Trust in Punjab renting its auditoriums and halls for seminars or exhibitions etc for a period of 3-4 days? If yes, then plz give the applicable rate.

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Raj Kumar Makkad (Expert) 17 December 2009
Luxury Tax is applicable in the case of the trust in the given matter and the rate of tax is 10%.

Punjab Government has decided to charge 8 % luxury tax on hotels having room rate of Rs 200 and above and 10% from banquet halls. The state government has directed the hoteliers, banquet halls and marriage palace owners to get them registered to deposit first installment of the tax by the end of next month. The government expects to earn Rs 20 crore a year through this step.

The state government has notified that it will now charge 10% luxury tax, 12.36 % service tax and 12.50 % value added tax (VAT) from banquet hall owners. Hoteliers feel this will be a burden on hotels as well, as most of them have banquet halls in hotels. They feel luxury tax should be applicable to three-star to five-star hotels and not to small-budget hotels.

Luxury tax is charged on hotels having a roof tariff of over Rs 2,000 in Haryana and Chandigarh. However, luxury tax has been levied on hotels charging a meager Rs 200 in Punjab, the state hoteliers added.

â€œThe occupancy rate has come down from 90% to 40% in wake of the Mumbai carnage. At this time, the industry is trying to woo tourists by offering special discounts and imposition of luxury tax at this...