• Provides Rs 3472 crore for 2009-10 towards Commonwealth Games.
• Fringe Benefit Tax abolished
• Minimum Alternate Tax (MAT) to be increased to 15% of book profits from 10%. The period allowed carrying forward the tax credit under MAT to be extended from seven years to ten years.

• Grant Infrastructure status to the Hotel industry: Not fulfilled.
• Coverage of the benefits granted under Section 80 ID should be extended to all categories of Hotels throughout the Country: Not fulfilled
• Section 32 of the IT Act should be amended to restore the depreciation rate to 20%: Not fulfilled
• Extension of tax holiday scheme of 5 years to all categories of hotels including those of 5 star hotels, especially in Delhi and NCR region to speed up addition of hotel rooms which are needed for Commonwealth Games of 2010: Not Fulfilled.
• Luxury tax rate should be reduced atleast 5% from the current levels of 5-15% depend on state governments: Not Fulfilled

Budget Impact

No Sector specific announcement was made in the Union Budget 2009-10. So there will not be any impact on the industry.

Stock to Watch

Indian Hotels, Hotel Leelaventure and ITC

Outlook:

The Union Budget 2009-10 not offer much to the Hotel industry. Currently industry is passing through painful transition, abolishing the FBT would benefit the all hotels over the board. Higher allocation towards Commonwealth games augurs well for the upcoming properties in the NCR region. Overall the impact of Union Budget 2009-10 on Hotel industry is neutral.