The Hotel-Receipts Tax Act, 1980

Summary of The Hotel-Receipts Tax Act, 1980
Key Provisions
1. Application: - Applies to hotels with room charges of ₹75 or more per day per individual.
• Adjusts composite charges to determine taxable room charges.
2. Taxation: - Tax Rate: 15% of chargeable receipts.
• Foreign Exchange Reduction: 5% reduction on foreign exchange receipts (excluding certain taxes).
• Chargeable Receipts: Includes all charges for accommodation, food, drink, and services, minus specified deductions.
3. Deductions: - Bad debts (written off and previously accounted for).
• Payable taxes (sales, entertainment, luxury).
• Tax under this Act.
4. Authorities & Procedures:
• Tax Authorities: Mirrors the Income-tax Act, 1961.
• Return Filing: Within 4 months of the previous year's end.
• Assessment, Self-Assessment, and Penalties: Detailed provisions for compliance and non-compliance.
5. Penalties & Compliance:
• Late Payment Penalty: 2% per month of unpaid tax.
• Revised Returns and Assessments: Allowed with provisions.
6. Definitions
• Hotel: Provides residential accommodation for a fee.
• Chargeable Receipts: Total charges for hotel services, computed as per the Act.
• Assessee: Person liable for hotel-receipts tax.

Legislative History:

The Hotel-Receipts Tax Act, 1980

● Act Title - The Hotel-Receipts Tax Act, 1980

● Act Number / Year - 54 of 1980

● Act ID (India Code) - 198054

● Presidential Assent Date - December 9, 1980

● Enforcement Date - December 9, 1980

● Nodal Ministry - Ministry of Finance

Precedent & Historical Rationale

● Taxation on Luxury Hospitality Services - Enacted to levy a special tax on the gross receipts of luxury hotels charging high room tariffs to mobilize additional central revenue from affluent domestic and international travelers.

● Fiscal Mobilization & Scope - Formulated to impose a 15% tax on chargeable receipts (room accommodation and food/beverage charges) of hotels where the daily room tariff per individual exceeded specified thresholds (e.g., ₹75 or more per day). The Act provided the statutory machinery for assessment, collection, and appeals administered through the Income-tax Department until the tax was subsequently discontinued under later Union Finance Acts as part of tax simplification efforts.

Parliamentary Trajectory & Enactment

● Formulation - Introduced by the Union Ministry of Finance (Department of Revenue) as part of targeted indirect/direct fiscal measures introduced in the 1980 general budget to curb conspicuous consumption in commercial hospitality.

● Parliamentary Passage - Debated and passed by both Houses of Parliament (Seventh Lok Sabha and Rajya Sabha) during the winter session in November–December 1980.

● Presidential Assent - Received Presidential Assent on December 9, 1980.

● Enforcement - Enforced on December 9, 1980.

Source - Official Record of Parliament, India Code, and Ministry of Finance.