The Uttar Pradesh government plans to amend property tax rules, effective in the next financial year, with a focus on relaxing tax rates for starred hotel properties to encourage tourism and employment growth in the state. The amendments are driven by the need to distinguish between bed and breakfast accommodations, homestays, and other budget hotels, ensuring they adhere to tax norms. Eight out of nine objections to the draft amendments came from stakeholders in Agra, a major tourist destination in Uttar Pradesh. The changes aim to harmonize tax structures for star and budget properties while addressing concerns about fairness and revenue balance.
The Uttar Pradesh government is in the process of revising property tax regulations, with plans to implement these changes in the upcoming fiscal year. The urban development department took the initiative to amend the rules governing tax calculations for specific properties and introduced a draft of these modifications in early July. Subsequently, the department received nine suggestions and objections related to the proposed changes. The amended proposal will undergo a thorough review process, culminating in a presentation to the cabinet for approval. Following this, the updated regulations will be officially announced. It's worth noting that the last significant amendments to property tax rules occurred in the fiscal year 2013–14.
While the rates for residential and non-residential buildings will remain unaffected, the department is considering granting certain concessions to operators of starred hotel properties. This move is aimed at promoting tourism and generating employment opportunities within the state. Additionally, there is a need to establish clear distinctions between bed and breakfast accommodations, homestays, and other budget hotels and guesthouses, each of which should be subject to property tax according to their respective norms. Out of the nine objections, stakeholders from Agra, a city that draws around 60% of foreign tourists visiting Uttar Pradesh and houses over 2,000 hotels, have filed eight of them. The rationale behind these amendments lies in the tourism department's decision to grant industry status to star properties.
Consequently, these operators have been assured that house tax, water sewerage tax, and other municipal charges will be levied based on rates applicable to industrial units. With the proposed rule changes, star properties, which currently face potential tax liabilities of up to six times the base rate, would be subject to only three times the base rate. However, for budget hotels, guesthouses, and similar accommodations, the property tax rate will remain at six times the base rate. The President of the Agra-based National Chamber of Industries and Commerce, Rajesh Goyal, appealed to the government for uniformity in property tax structure between starred and budget properties, asserting that the same charges should apply to both categories.
In conclusion, the Uttar Pradesh government's decision to amend property tax rules demonstrates its commitment to promoting tourism and providing relief to the hospitality industry. Striking a balance between boosting tourism and generating revenue will pose a significant challenge to the successful implementation of these modifications.
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