Representatives of leading hotel chains, hospitality and travel industry on Monday demand rollback of service tax recently proposed by the Finance Minister, Pranab Mukherjee, in his budget presented to Parliament on February 28.

“We want a rollback of the service tax imposed on hotels and air conditioned restaurants as it will adversely hit the industry. The hospitality sector has been constantly overlooked in every budget, but this time we have been hit,” Bharat Hotels Chairperson and Managing Director Jyotsna Suri told reporters here. She said players from the sector had presented their case to the government and were optimistic of a positive response. “We have met a lot of people in the government, including officials in the Finance Ministry. Even the Tourism Minister, Subodh Kant Sahay, has met with the Finance Minister to take up the request,” Ms. Suri said.

“Additional 5 per cent service tax on hotel rooms will take the overall taxes by up to 17.5 per cent in some states like Kerala. It will not only drive Indian tourists outside the country but also impact inbound travel,” WTTC India Initiative Chairman Vivek Nair said.

Restaurant owners said they would be forced to pass on the additional burden of 3 per cent service tax on AC restaurants to the consumers if the rollback does not happen. “A consumer will be forced to pay about 25-30 per cent taxes on the total bill value,” National Restaurant Association of India President and Nirula's Managing Director Samir Kuckreja said.

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