Many have rued the disastrous impact of the lockdown on India’s hospitality sector. However, even before the pandemic struck, hotel occupancy rate were hovering around 70%.
The hospitality and tourism domains account for 12.75% of India’s total employment, which is fairly significant. Due to COVID-19 and the subsequent lockdowns, the industry witnessed an estimated 70% job loss, which had a spiralling effect on the overall economy.
Diptikant Parhi, Partner, BGJC Associates & LLP tells Vinita Bhatia about the income tax (IT) benefits that the government extended to the hotel industry keeping the pandemic, lockdown and the unlocking phases in perspective.
CUT TO THE CHASE
The first thing one needs to understand is that there is no specific endowment in the Income Tax Act, 1961 that gives special benefits and concessions to the hotel industry, unlike the Australian Income Tax. However, one need not lose heart.
There are some general provisions in this Act that offers benefits to all tax payers. This allows them to set off the current year losses arising from businesses or professions from the subsequent year’s profits up until eight assessment years under the same head. So, let us further analyse the measures taken by the government to give concessions following the unprecedented lockdown resulting in disruption of all business activities.
To begin with, TDS rate was reduced by 25%, resulting in lesser funds being blocked in tax and more funds being made available to hotel industries. For example, if their income was INR 100 preCOVID-19, the receipt after TDS was INR 90 while post-COVID-19 it will be INR 92.5 (assuming that the TDS rate was 10% before March 2020 and 7.5% post-COVID).
This story is from the February 2021 edition of Hotelier India.
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This story is from the February 2021 edition of Hotelier India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
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