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I went to India recently. I stayed at the Hyatt Regency in Delhi. I hate to say anything negative about the hotel – the facilities, including the room, the gym and the lounge, were just fine. But something negative did happen, and it did leave me with a very bad taste about the experience.
I will set forth the facts in the simplest terms possible.
I stayed at the hotel three nights. There were various legitimate rates available at approximately $100 per night. I booked one. I also used a Diamond suite upgrade, and was given a nice junior suite. I will blog about it one day soon.
There are quite a few hotel taxes in India, which together add up to approximately 20% per night. Thus, when I checked out of the hotel, I expected my bill to be roughly $120 per night, or $360 for three nights.
The night before I checked out, I went to the front desk and asked for a copy of my bill. Something looked horribly wrong. The tax imposed on the room was approximately $80 per night or 80%. Surely, this was an error. I brought it to the clerk’s attention and that’s when the problems ensued. They sneered at me and joked that I must be drunk. I wasn’t.
The clerk (or was it the manager, as I was beginning to feel like they were ganging up on me), then explained that, by law, tax is calculated on the published or rack rate of the room (a rate almost no one ever really pays), rather than on the rate actually charged for the room. Since I had used a suite upgrade, and they value the room at approximately $400 per night, they explained that I was responsible for $80 tax on the suite per night. When I complained, I was essentially told that I was trying to take advantage. I wasn’t. I was shocked.
The clerk then, after consulting with various other male employees, said he was correcting the bill.
He handed me another bill. I went to my room, and I still couldn’t make sense of the bill. Now the tax was about $40 per night, or 40% of the rate charged.
When I went to pay the next morning, I asked why the tax was still so high. I was told that they removed the tax for the suite I’d been upgraded to, but that they still valued the room I had originally booked at about $200 per night (rather than the $100 rate per night charged), so I must pay $40 per night tax.
I knew I couldn’t get anywhere further with them, so I paid the bill under protest and contacted Hyatt customer service when I got home. They kindly apologized for the clerks’ behavior, and refunded the excess charges to my credit card.
None of us could make heads or tails of whether such a law really exists in Delhi, requiring taxation on the value or published rate of a hotel room rather than the rate charged. There are two threads in Flyertalk on the topic, here and here. If you read through the Flyertalk threads, you’ll see that this is not an isolated occurrence. Others have occasionally faced the same issues that I faced. People have referred to a legal provision in paragraph #36 of the Flyertalk thread to possibly justify the rack rate taxation. That thread, from 2006, states:
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. (errors in original)
The above is the only legal reference in the Flyertalk threads that I could find to “justify” this exorbitant tax. In fact I reviewed the Indian Government Luxury Hotel provisions and could not find any mention of “published” rate taxation. Under Rate of Tax, the Indian Law states:
|Rate of Tax|
|The luxury tax is levied on the turnover of receipts of a hotelier at the notified rate not exceeding 15%. The Govt. may notify different rate(s) from time to time and for the different classes of hotels. At present the rate of Luxury Tax is 10% and this is being levied w.e.f 22-06-2009 on declared tariff.|
Does this provision support the hotel’s position that they must apply tax on the inflated rack rate? I don’t know. Do the Indian Tax officials actually calculate hotel tax based on the rack rate or on the amount paid by the guest for the room? I don’t have the answer, but something doesn’t seem right.
Have you traveled to Delhi, India recently? What was your experience with the hotel tax?
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