Hyderabad: Tax burden on 3 star and 5 star hotels in AP will come down from 14.5 per cent to 5 per cent, thanks to the AP tourism policy 2015-20. To attract the hotel industry as a part of tourism development in AP, the state government has decided to reduce the VAT on 3 and 5 star hotels.
In the AP Tourism policy 2015-20, the state government has said that VAT will be charged at 5 per cent for all new tourism infrastructure projects from the date of commencement of operations.
Keeping this in view, some hotel manageme-nts and ministers pressurised the government to reduce the VAT and star hotels in the state.
AP will make necessary amendments in the AP Value Added Tax Act 2005. The proposed VAT rate shall also be applicable for existing 3 star and above category hotels in the state.
At present, the government is collecting 14.5 per cent VAT from 3 stars and above category hotels and 5 per cent VAT from below 3 stars hotels. To bring uniformity in the tax structure in the hotel industry in the state, the government has decided to reduce the VAT on 3 stars and above category.
The finance department gave green signal to this effect and orders will be issued in a day or two. Due to this decision, the state government will lose Rs 20 crore revenue per year.
The state government’s decision will help only the big hotels and not the below 3 stars hotels. There are about 742 hotels in the state. New star hotels are coming in the new capital area and at Vijayawada also.
