Originally Posted by yosithezet
I just returned from Delhi where I stayed in the HR. Due to issues with the travel desk previously I and my colleague were both upgraded to 2-room suites (609 and 709) and given truly amazing service (other than yet another travel desk issue) on which I will comment seperately after recovering from a whirlwind week of travel. However I want to detail the tax issue.
I booked a standard room at a corporate rate which included breakfast.
When I checked out the Luxury tax came to 55% of the rate I was paying for the room. This based on the 'published rate' for the room I actually stayed in. I told them that this was essentially punishing me for upgrading me and they reduced it down such that it was based on the 'published rate' on the room I had booked which still came to 27.5% of the rate I actually paid. As a reminder the Luxury Tax is 12.5%. Also I was charged VAT on the breakfast that was included in the room. I was able to get them to remove the word breakfast though.
They did offer to provide me with a copy of the Public Notice about this Luxury tax. The copy is a bit tilted so there are words I can't make out and I can't find it online but it says the following:
Govt. of NCT of Delhi, Office of Commissioner (Excise, Entertainment & Luxury Tax) (Luxury Tax Branch)
...
2. As per the provisons of the amended Act, Luxury Tax shall be levied on the decalred/published tariff with regard to newely insterted sub-section-4 of section-? which provides that where the luxury priveded in a hotel to any person (not being an employee of the hotel) is not charged at all, or is charged at a concessional rate nevertheless there shall be evied and colleced the tax on such luxury, as if full charges for such luxury were paid to the hotelier.
It implies that it is the liability of the hotelier to collect and deposit the tax on declared/published tariff irrespective of whether any concession on the same is provided or no tariff is charged. All the concerned are hereby directed to collect the tax as per the amended provisions.
...
So it would appear that according to the letter of the law the Delhi gov't deserve to be paid tax on even reward stays.
Thanks for sharing all of this.
The tax on the published rate of the room booked -- instead of the room upgraded -- would be in line with standard practice at comparable hotels in Delhi,
after the hotel is challenged on the matter.
That is, a request for adjustment is generally needed, and the adjustment you got is about as good as I've gotten it with HR DEL and HR DEL's local competitors.
For reward booking stays, perhaps a way to get around the tax on the reward stay would be if the tax were paid for by the hotel award program itself (i.e., generally a foreign entity that is not the hotel owner)?
(The likelihood of that is another matter. 
)
The current default arrangement for taxing hotel customers on the rack rate of the room assigned rather than on the actual room rate paid (if any) is one of the more bizarre arrangements I've come across in my travels. And the post-challenge adjustment should not be necessary if this government-mandated nonsense stops. I feel bad for the hotels and hotel customers who seem to get into an unnecessarily confrontational money matter due to such a bizarre system of taxing hotel guests. I can't help but believe that it leaves a bad taste in the mouth of some visitors; I know it annoys me.
A simpler taxation system -- even if it separates me from a bit more of my money
-- would work better.
Thankfully this nonsense doesn't happen in the other places in India that I frequent.