Some hotel markets are known for having incredibly high taxes and fees. In some cases this is purely “legitimate” taxes, while in some cases they package taxes and a service charge for employees under the same amount, even though those are very different things.
For example, when I think of booking a hotel in Mexico, the first thing that comes to mind is the 34% in fees that go on top of the room rate — this includes a 16% VAT, 3% state tax, and 15% service charge. Mexico is a great market for redeeming points, since you don’t pay those fees when you redeem points.
India’s High Hotel Taxes
Another market known for high hotel taxes is India. Historically hotel taxes in India are as follows:
- 18% on rates of under 7,500 INR (less than ~106USD)
- 28% on rates of over 7,500 INR (more than ~106USD)
India Lowers Hotel Taxes
As of October 1, 2019, India will be reducing the taxes on hotel stays, as follows:
- 0% on rates of under 1,000 INR (less than ~14USD)
- 12% on rates between 1,000 and 7,500 INR (~14-106USD)
- 18% on rates of over 7,500 INR (more than ~106USD)
Those are some significant decreases in fees, which is pretty exciting. The 0% tax means that many people in budget accommodations won’t have to pay any taxes when staying at hotels, while even at high end hotels taxes are decreasing by 10%, which is significant.
I do find it odd that the tax is based on the total amount rather than tiered. In other words, a hotel costing 7,499INR would end up costing significantly less than a hotel costing 7,501INR, since there’s such a huge spread on the tax for the entire amount.
Hotels are of course applauding this change. While I doubt rates will fully increase to correspond to the reduction in taxes, I’d be surprised if we don’t at least see hotel rates increase a bit as a result of this.
A 28% tax on hotel stays sure is steep, especially when you consider that it doesn’t even include any sort of service charge. At 18% taxes are still on the high side, though we’ll take a 10% drop in those fees.
Interestingly at the same time India is increasing the taxes on caffeinated beverages from 18% to 28%. So out with the hot beverages, in with the hotels, it seems.