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Fillip to tourism-friendly policies

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The ministry of tourism has advised the state governments/union territory administrations to follow tourism friendly policies like allotting land sites on revenue sharing basis, granting extra Floor Space Index (FSI)/Floor Area Ratio (FAR) for hotels, creation of land banks, single window approach for promoting hotel projects, rationalisation of taxes, etc., for the growth of tourism sector in the country.

Sultan Ahmed, minister of state for tourism, informed the Lok Sabha recently that to encourage the growth of hotels, the following incentives, inter alia, have been announced:

  1. Five-year tax holiday for two, three and four-star category new hotels located in all UNESCO declared ‘World Heritage Sites;’ (except Mumbai and Delhi) which start operating between April 1, 2008 to March 31, 2013.
  2. An investment linked deduction under Section 35 AD of the Income Tax Act extended for new hotels of two-star category and above anywhere in India to facilitate the growth of tourist accommodation in the country.
  3. The Reserve Bank of India has de-linked credit for hotel projects from Commercial Real Estate (CRE), thereby enabling hotel projects to avail credit at relaxed norms and reduced interest rates.
  4. External Commercial Borrowing (ECB) norms relaxed by the ministry of finance to solve the liquidity crunch being faced by the hotel industry for setting up new hotel projects.
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