Palampur’s Hospitality Balancing Act—Hotels and Homestays Share the Spotlight

Image Source: The Tribune

The Palampur Hoteliers Association has welcomed the Himachal Pradesh government's move to regulate homestays, given that it is concerned about illegal operations that have adversely affected the organized hospitality sector. The new law has provisions for making homestay registrations easier, tax compliance in accordance with norms, and maintaining state revenues.

Regulatory Framework and Compliance

The law makes small homestays of four rooms or fewer continue to be exempt from GST but requires others to register and pay tax.

The authorities will conduct surveys to identify unregistered homestays operating outside legal limits.

The Tourism Department will undertake the enforcement so that there is a level playing field between hotels and homestays.

Hotelier Problems

There are lots of illegal homestays in Palampur, Baijnath, Bir, and Kangra, without paying higher rates and dodging taxes.

Hotels pay 18% GST, property tax, and commercial charges for electricity, whereas unregistered homestays avoid all such outflows.

Hoteliers argue that unregulated homestay operations cut their business and result in the loss of state revenue.

Industry Response and Future Outlook

Hoteliers have requested the government to implement strict surveillance measures in order to prevent tax evasion.

The new act is bound to bring transparency and accountability in the hospitality sector.

If strictly enforced, the regulation could create a more balanced tourism scenario in Himachal Pradesh.

Sources: Tribune India, Hindustan Times, Economic Times, MSN, Business Standard.