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. and the ambit of luxury tax user further extended w.e.f. 09.08.2012 by making if applicable on the service provided the Banquet Halls Gyms and Spas.
The term "Luxury " means use of goods, services, property, facilities etc. for enjoyment or comfort or pleasure or consumption by any customer extraordinary to the necessary of life, that is to say:-
1. Accommodation or space provided in a banquet hall which includes air cooling, air conditioning, chairs, tables, linen, utensils and vessels, shamiyana, tent pavilion, electricity, water, fuel, interior or exterior decoration, music, orchestra, live telecast and the like,
2. Service provided in a gymnasium or health club, which includes services of trainer or personal trainer, steam, sauna and the like,
3. Accommodation and other services provided in a hotel, the rate or charges for which, including the charges for air cooling, air conditioning , radio, music, extra beds, television and the like, is seven hundred fifty rupees per room per day or more, whether such charges are received collectively or separately per room per day,
4. Facilities or services provided in a spa which includes beauty treatment, manicure, pedicure, facial, laser treatment, massage shower, hydrotherapy, steam bath, saunas or cuisine, medispa and the like;
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. At present the rate of Luxury Tax is on the room tariff of Rs.750/- and above but less than Rs.1000/- and 10% on room tariff and above on per room per night basis on residential accommodation provided by way of business in a hotel a lodging house, an inn a club, a resort, a farmhouse, a public house or a building or part of building. In the case of services provided in the Banquet Hall Gyms Health Clubs and Spas. The rate of tax is 3% Services only.
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 a rate admissible under the act of prevailing at that point of time.
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.
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 Proprietor..
(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 Proprietor first becomes liable to pay the tax.
(2) A Proprietor who has additional 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 1/1A, 4 and 7 duly completed
- Two passport size 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.
- Copy of first Bill and copy of first bill against which the hotelier first became liable to pay Luxury Tax.
- Photocopy of first page of Guest Entry Register.
- Copy of partnership deed / Certificate of Registration under the Society Act /trust deed / Memorandum of Article of Association.
- Copy of PAN of the Director / Partners / Proprietor / Karta etc. / Authorised Person / Company / trust / Firm.
- Copy of Board resolution in respect of authorised person.
- Detail of Bank Accounts.
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 Proprietor 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 Proprietor 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 Proprietor 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 establishment which 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.
Further, 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.
The liability or the onus of applying for registration under the Luxury Act lies completely on the Proprietor. All the Proprietors 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.
Last Date of Filing of Return
1. Monthly - 15 th of the following month. i.e 15th May for month of April
2. Quarterly - Last day of month following the quarter. i.e 30th April for quarter ending March
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 : 23378087
Page last updated on: 15,Jan 2019