Excise Department
 

Luxury Tax


As an attempt to mobilise a new source of revenue, the Govt. of Delhi decided to explore an hitherto untapped source of revenue namely the Hospitality Industry. The Luxury Tax was introduced w.e.f from 1.11.1996 on various hotels, lodging houses, clubs etc. "Luxury Provided in hotel" means accommodation and other services provided in a hotel, the rate or charges for which including the charges of air conditioning, telephone, radio, music, extra beds and the like is Rs. 500/- per room per day or more; but does not include the supply of food, drinks or other services which is separately charged for.
Luxuru Hotel
Luxury Hotel

The term "hotel" includes a residential accommodation, a lodging house, an inn, a club, a resort, a farm house, a public house or a building or part of a building, where a residential accommodation is provided by way of business.

Rate of Tax

The luxury tax is levied on the turnover of receipts of a hotelier at the notified rate not exceeding 15%.  The Govt. may notify different rate(s) from time to time and for the different classes of hotels. Rate notified  time to time by the Govt. are as under :-

  • 10% from 1.11.96 on declared tariff.

  • 10% from 1.10.99 on actual/charged tariff.

  • 12.5% from 10.8.2000 on actual/charged tariff.

  • 10% from 2.11.2001 on actual/charged tariff till 30.09.2002.

  • 12.5% from 1.10.2002 on actual/charged tariff.

  • 10% from 1.12.2002 to 31.03.2003 on actual/charged tariff.

  • 12.5% from 01.04.2003 on actual/charged tariff.

LIABILITY OF HOTELIERS

No hotelier liable to pay tax under the Act, shall conduct or cause to be conducted the activity of providing residential accommodation for monetary consideration unless he possess a certificate of registration as provided by the Act. The hotelier who is liable to pay the tax may collect it from the customers.

Where a business is owned, managed or run by a firm, then the firm and each of the partners of the firm shall be jointly and severally liable for payment of tax.

Every hotelier required to possess a certificate of registration shall apply in the prescribed form to the Commissioner within thirty days from the date on which the hotelier first becomes liable to pay the tax.
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HOW TO GET REGISTERED

Hotels that come under the purview of Delhi Tax on Luxuries Act, 1996 should get themselves registered in the Luxury Tax Department.

(1)     Every application for the registration under section 8 shall be made in Form 4 by a hotelier.

        (a)     Within a period of thirty days from the appointed day if he was liable to pay the tax under the provisions of the Delhi Tax on Luxuries Act, 1996 before the appointed day; and

        (b)     In any other case, within a period of thirty days from the date on which such hotelier first becomes liable to pay the tax.

(2)     A hotelier who has places of business within the jurisdiction of different registering authorities, shall make an application for registration to such authority in whose jurisdiction his chief place of business is located.

 

Basic requirements :- The following are the basic requirements / documents, a hotelier has to submit to get itself registered :-

  • Form 1, 4 and 7 duly completed
  • Photograph of person/ partners. Application form shall be duly signed and verified.
  • Proof of ownership/possession of property by the hotelier (any document indicating proof of possession e.g. rent, agreement, rent-receipt etc.)
  • Proof of residential addresses as furnished in para-2 of Form 4 - by way of a copy of the ration card / voter’s identity card / driving licence / passport / telephone bill / electricity bill / affidavit / any other documentary proof.

Form No. 1
Form No. 4
Form No. 7

Form No. 8

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GRANT OF CERTIFICATE OF REGISTRATION

The Department has to see that each and every relevant document and relevant information, as required, has been furnished by the applicant for the grant of certificate of registration. The certificate of registration shall be issued in form No. 5. If  a hotelier applying for registration is a firm, Hindu undivided family, body corporate or association of individuals or Government, The certificate of registration shall be issued in the name of such firm, family, body corporate, association or Government as the case may be.

Where the hotelier has two or more places of business within the National Capital Territory of Delhi, the registering authority in whose jurisdiction the chief place of business lies, shall issue to the hotelier one copy of certificate of registration for each additional place of business specified in the application for registration.

The hotelier registered under the Act is required to pay tax on quarterly basis i.e the period ending 31st March, 30th June, 30th September & 31st December by the end of succeeding month respectively alongwith the returns, except in case of major hotels who are required to pay the tax on monthly basis (the return shall be filed before the 15th of the next month).  In order to quantify the tax due from the hotelier in respect of the year during which he is liable to pay tax, assessment is carried out by the assessing authority. 

CHANGE OF APPLICATION OF TAX FROM "DECLARED RATE" TO "ACTUAL RATE"

The Delhi Tax on Luxuries Act, 1996 which came into force wef 01.11.96 has been introduced to tap on luxuries provided in the Hotel/Guest House.  The tax was applicable on the declared tariff at the time of inception of the Act, according to which, hotelier had to pay tax on the declared (printed) tariff irrespective of the tariff which was actually charged. The Act was amended vide notification dated 16.9.99 and the Luxury Tax was actually made applicable on the declared tairff.

However, the exemption to diplomatic missions as mentioned below, was allowed vide notification dated 15.5.2000:-

1.     Persons with diplomatic status in Embassies of other countries in India.

2.     Guest of the Embassies .

3.     Diplomats coming from abroad for conferences.

4.     Employees, representatives and delegates of United Nations and its affiliated organizations such as UNICEF, WHO, UNESCO, ILO, etc. 

WARNING

The liability or the onus of applying for registration under the Luxury Act lies completely on the hotelier. All the hoteliers who have not registered themselves, must do so at the earliest. Whoever carries on business without being registered in willful contravention of Section 8 of Delhi Tax on Luxuries Act, 1996, shall on conviction, be punished with imprisonment for a term which may be extended to one year with fine.

For other specific details, kindly contact the

Luxury Tax Officer
Excise, Entt. & Luxury Tax Department,
L-Block, I.P. Estate,
New Delhi-110 002
Phone :  23370946
Emailcexcise@nic.in

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