Illegal homestays a threat to hotel industry in Kangra district

Ravinder Sood

Palampur, February 6

Unregistered homestays have mushroomed in Palampur, Baijnath, Bir and other parts of Kangra district, posing a serious threat to the organised hotel industry. These homestays are also eating into the revenue of the state government.

As per government norms, a homestay with four rooms is exempt from the Goods and Services Tax (GST) and other levies. The maximum tariff of a homestay is Rs 2,500. However, in the absence of proper checks from the government, a large number of illegal homestays having more than four rooms have come up in rural areas, causing huge losses to the state exchequer. Hotel owners have to pay 18 per cent GST on rooms, besides property tax while homestays pay nothing to the government.

Hotel owners say that though they pay all taxes, the government is taking no steps to protect them against illegal tourism activities.

Vinay Dhiman, District Tourism Officer, says that the Tourism Department conducts random checks on illegal homestays and defaulters are fined Rs 10,000 for the first time and on the second default, they have to pay a fine of Rs 200 to Rs 2,000 per day under the Himachal Pradesh Tourism Registration Act. He adds that there are 925 registered homestays in Kangra district.

Vinay Sharma, president of the Palampur Hoteliers Association, says that many homestay properties not registered with the Tourism Department are offering room bookings online. Most of these properties are running illegally and not paying any taxes to the government and booking rooms at cheaper rates, thus adversely hitting the business of the hotel industry.

He adds that hotels have to follow all rules like pay a fee to the Pollution Control Board, government prescribed minimum wages to workers and commercial rates for power and water, comply with labour laws while illegal homestays book rooms through online portals without paying the GST or other taxes and uses power and water supplied at domestic rates.

“We are not against tourism units in villages but these should be run in a legal way. The government should direct the Tourism Department to conduct a survey to identify such units. The owners of such units should get their properties registered with the department,” says Vishal Rana, another hotelier of Palmapur.

Sanjay Kapoor, owner of Yashita Hotel, says, “It is worrisome for the hoteliers of Kangra that tourists are coming to the district but the room occupancy in hotels at Palampur, Dharamsala, Bir and Baijnath is negligible. Tourists are now staying in illegal units in villages.”

Hoteliers pay 18% GST, property tax

• Hotel owners have to pay 18 per cent GST on rooms, besides property tax while homestays pay nothing to the state government
• A homestay with four rooms is exempt from the GST and other levies.
• Many homestays not registered with the Tourism Department are offering room bookings online, says president of the Palampur Hoteliers Association
• Most of these properties are being operated illegally without paying any taxes