Hospitality gets foot in infrastructure door
The effort is paying off as Indian hospitality has for the first time got the finance ministry to give it some sops under the infrastructure category.
The industry has been lobbying to be included in Section 80-IA of the Income Tax Act of 1961 which relates to ‘deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc’. This would have allowed hoteliers immense savings for their entire project.
Instead, finance minister Pranab Mukherjee clubbed Indian hospitality for sops under Section 35-AD, a new section in the IT Act which allows only for deductions of capital expenditure for project undertaken (Except cost of land, goodwill or financial instrument) from April 1, 2010. This is applicable for two-star and above project only.
“This is not exactly what we were expecting, but our foot is in the door. It is a victory nonetheless and perhaps we can achieve 80-IA next year,” said Vivek Nair, vice-chairman & managing director, Hotel Leelaventure.
This was the only mention of hospitality in this year’s Budget. Formal statements from HRAWI and HAI are expected shortly.