By central Government
(A) Loan Facility : The Tourism Finance Corporation
of India provides financial assistance to the private sector
for construction of hotels of Rs. 3 crore and above as well
as other tourist facilities of equal costs.
Interest Subsidy : 3% interest subsidy is available to
hotels of one to three star category on loans sanctioned by
financial institutions. 5% Interest subsidy is available on
loans if tourism Inuits are constructed in Jaisalmer, Jodhppur,
Bikaner and Barmer.
Income tax incentives
Section 80 HHD of the Income Tax Act : This is available
to hotel on their foreign exchange earnings . 50% of profits
derived by hotels, travel agents and tour operators in foreign
exchange are exempt from income tax. The balance 50% of profits
in foreign exchange is also exempt, provided it is reinvested
within a period of 5 years in new hotel projects or expansion
of existing unit. In an amendment of this section in the budget
proposals of 1999, the balance amount can also be invested
in equity shares of eligible issue of capital . This would
be by a public company and the entire proceeds of issue should
be utilized for new hotel projects or for facilities for growth
of tourism as prescribed by the central Government.
section 80Ib of the Income Tax Act : Section 80IB of Income
Tax Act 1961 give income tax exemption not related to foreign
exchange earnings. This is because hotels are like and infrastructure
facility contributing to the economic development of an area.
This section was earlier known as 81 IA and has been renamed
as section 80-1A in the budget proposals of 1999. All hotels
which starts operating between 1.4.1997 to 31.3.2001 will
be eligible for income tax deduction as under:
location in the hilly areas, rural areas, places of pilgrimage
or a specified place of tourist importance will be eligible
to 50% deductions from their profits / gains.
respect of hotels located in other places, the deduction allowed
is 30% only, except in Metro cities of calcutta, Chennai,
Delhi and Mumbai, Where no deductions allowed.
benefits are only available to hotels approved by the Ministry
The hilly areas, rural areas and places of pilgrimage have
been defined as :
Area : The term "hilly area" means any area located at
a height of 1,000 meters or more above sea level.
of Pilgrimage : A "palace of pilgrimage" means a place
where any temple, mosque, gurudwara, church or other place
of public worship of renown throughout any state of States
Area : It means any area other than :
1. an area which is comprised within the jurisdiction of a
municipality (whether known as a municipality, municipal corporation,
notified area committee, town area committee or by any other
name) or a cantonment board and which has a population of
not less than ten thousand according to the preceding census
of which relevant figures have been published before the first
day of the previous year
an area within such distance not being more than fifteen kilometers
from the local limits of any municipality or cantonment board
referred to in sub-clause
(i) as the Central Government may, having regard to the stage
of development of such area including the extent of, and scope
for , urbanization of such area and other relevant considerations
specify in this behalf by notification in the official Gazette.
Govt. Incentives to Tourism Units
1. Remission in stamp duty : To the extent of 50% on
transfer of deeds relating to land purchased in municipal
areas and to the extent of 100% on transfer of deeds relating
to land purchased in panchayat area of such hotels.
2. Remission in Land and Building Tax : 100% for hotels
for 5 years in municipal area.
3. Remission in Luxury Tax : 50% for 5 years in municipal
areas and to the extent of 100% for 5 Years in panchayat areas
The above remissions shall be considered only if such new
hotels shall invest an least Rs.1.00 crore during the period
between 1-4-2000 to 31-2-2001 and start functioning by 31-12-2001.
violation of the above conditions the hotel owner shall be
liable to pay entire amount of stamp duly , land & building
tax, and luxury tax with penal interest of 24%per annum.
of Land for construction of Tourism Units
In Urban Area : This is being done under Rajasthan Land
Revenue (Industrial area allotment) rules 1959 on 99 year
Competent authority :
1. Collector in the districts
2. In jaipur Distt. Director of Tourism, Art & culture in
Development Charges :
RS 1,500/- per/acre at Jaipur & Kota within 15 miles radius
2. Rs.500/- per acre- at places having population of of 3
lakh and above except Jaipur& kota .
3. RS 300/- per acre-at places having population of 50,000
and above but below 3 lakh. 4. RS
200/- per acre-at places having population of 10,000 and above
but below 50,000,
5. RS 100 peer acre- at places having population below 10,000
(c) Conversion Charges :
RS 250 per acre for areas having population of 3 lakh and
2. RS 150 per acre-for areas having population of 10,000 and
above but below 3.00 lakh
3. RS 75 per acre- for areas having population of below 10,000.
2. In rural Area : Conversion of agriculture land for
non agriculture purpose in rural area for construction of
tourism units in being done under rajasthan Land Revenue (conversion
of agriculture land for non agriculture purpose) rules 1992.
Competent Authority :
(1) Collector in the Distt.
b) Conversion Charges : RS 1.00 per sq mt.
(3) For Heritage Hotel :
In rural area - No conversion charges
(b) In urban area - Conversion charges will be charged on
the built up area and equivalent
land as per rates specified under Rajasthan Urban Improvement
Trust Rules 1974.