WARNING: Issues about Hotel Taxes in India

The government tax on most of the international branded hotels in India is stated as 12.5% of the rate at the time of booking. However, note that some hotels (namely Intercontinental Hotels Group) argues that it is 12.5% of some officially published room rate that is likely to be higher than your quoted rate on various websites. We're currently talking to the IC Grand in Delhi about this matter specifically.

Some hotels are advertising the taxes as "Tax@Rack Rate of 12.50% per room per night is not included in the rate" and matters of the sort. This is true of Starwood (in the case quoted herein) and Intercontinental, etc.

Rack rate is not what most all of us are paying. This may push some people above the per diem amounts.

Edit: I did a bit more research into this:

The more "honest"/forthcoming hotel companies in this case are advertising the taxes as "Tax@Rack Rate of 12.50% per room per night is not included in the rate" and matters of the sort. This is true of Starwood (in the case quoted herein). Hyatt says: Additional Charges: 0.00% tax
12.50% occupancy tax". Intercontinental Hotels Group says: "Tax: 12.5% per night not included in rate effective 2 May, 2005 thru 3 May, 2005
GOVERNMENT LUXURY TAX". Marriott says: "*EXCL TX 12.5PCT ON RACK RATE*".

to the confusion.

Yeah, I've heard of this happening in some Indian hotels. I think it happened to me at The Park, Bangalore where we had a low corporate rate but they charged taxes on the rack rate. I just informed our procurement department and I believe it has been resolved.

I have never been charged any taxes on the Intercontinental the Grand Mumbai (or the Hyatts and the Le Meridien in Mumbai either, even though I remember that while booking it said that taxes were not included in the rate on the website). Maybe its a hotel specific thing for the ICs. Delhi state taxes perhaps? Although I did read somewhere that they were going to have a nationwide VAT soon instead of the state-specific taxes.

The VAT is being implemented state by state (with some holdouts still), but this so-called luxury tax implementation on rack rate vs. actual rate has come to my awareness only recently. There's been a (Union Finance Ministry-related) "luxury"/"occupancy" tax for years now on hotels (especially higher-end ones), but charging the tax on rack rate has never been clearly noted to me before.

In any event, the websites on which we book hotels should disclose this properly so that there are no surprises on check-out. An 11 to 13% higher-than-expected cost can and will push some people into violating the travel policies of their employer and/or of their clients.

I am also curious, like some others, whether or not the hotels are actually paying the taxes on some inflated rack rate or the taxes on the actual receipts. And if the taxes are calculated as a percentage of rack rate, perhaps a clear, up-front disclosure of the actual taxes chargeable would be advisable and beneficial for all.

Also, what happens if a top-tier status member of a chain gets an upgrade? Then do we pay the tax on the rack rate for that upgraded room or worse yet suite?

I reckon this is simply revenue. I asked the upgrade question myself, as IC DEL have graciously given me a suite .... And I wonder what happens if you are using a "free night" voucher or redeeming miles ??

This stinks. But it seems to be a Delhi situation: recent trips through BOM and HYD were straightforward.

I was just quoted a corporate rate at the Oberoi in New Delhi, which states that the rate excludes 12.5% government tax on the published tariff (of 18,000 rupees).

Do all 5-star hotels in New Delhi charge tax on the higher published tariff instead of the actual room rate? Is there a way to avoid paying the extra tax, at this or other hotels in town? (This will be for a vacation stay on my own dime, and I'm not thrilled about the incremental tax.)

The HR Delhi provided me with a copy of the law. You can check out post #36 in this thread . It is a Delhi law so if you stay out of Delhi, in Gurgaon for instance, you won't have this issue. This law is also in effect in the state in which Bangalore is located. I discuss in the thread my experience when being upgraded to a two room suite.

i will be staying on award in Delhi in November. the reservation clearly states the all taxes are included in the award. What happens if i'm upgraded? has anyone been through this? are the taxes in the award only on the room reserved (regular room), and i would have to pay any incremental difference? or are there not taxes for me to pay if i get upgraded?
if i have to pay taxes for upgrade on award as well as paid stay, it basically means all hotel chains in delhi are making useless any upgrade priviledges from their respective chains. is that violation of T&C of loyalty programs?

Which hotel are you staying at? Make sure to take a printout of your reservation and rate details. I still get upgrades on paid stays in DEL without much issue, but the taxes sometimes end up being higher on the folio when I get upgraded and sometimes are the same as they'd be for a non-upgraded room. If the taxes on a paid stay dissuade you from an upgrade, that's not the fault of the hotel; it's the fault of the government.

I'm staying at Le Meridien.

Since you will be at the Le Meridien (funny to say The The Meridien) I would suggest you contact SPG and ask them. Also, raise the specific question about this property in the SPG forum. Each loyalty program has their own T&C but I recall specifically that I had a Le Meridien award stay in Israel and the T&C of the specific award stay said that Israeli citizens would be taxed some $60 for the award stay. Did it violate the T&C? Nope. Did it violate the spirit of a loyalty program? Yep. I got around it by booking with a non-Israeli address and using my US credit card.

I love the address-shopping creativity too. (Happy holidays by the way.)

I'll check into my LeMeridien award stays for DEL, but my SPG Amex doesn't show any charges during those award stay dates. (Unless someone else checked in on my behalf -- which is possible -- I can't think why I would have used another card for incidentals during the award stay. ) That is, I need to look deeper.

Thanks for the holiday greeting! The address-shopping creativity is a trick I picked up on FlyerTalk of course!

Do all hotels in India tax at rack rate? Or is it just the global chains like Starwood and Intercontinental?

I believe it is local law, so applies to all hotels, and so tax is always at rack rate.

The tax at rack rate is simply to prevent hoteliers from avoiding the collection of the tax. Otherwise some innovative owners would just say they gave hefty discounts to all the guests.