Brief about the licenses & sanctions required to setup hotels in India. Also covers the various tax's to be paid.

1. List of Sanctions /Clearances
required from Central/State
Agencies to set up and operate a
Hotel.
KARNATAKA
Within Municipal Corporations in
Karnataka e.g. Bengaluru

2. At Project stage :
Nature of Approval required Licensing/Issuing
Authority
1. Sanction of Building Plan. Municipal Corporation e.g.
Bruhat Bangalore Mahanagar Palike
2. Clearance of Urban Ceiling Act State Government
3. Consent of Additional Floor space Corporation/ Bangalore
Mahanagar Palike
4. Height clearance of the Hotel Local Authority/ DGCA if it is
in the vicinity of airport and
in the Line of approach / take
offs of aircrafts
5. Land and Property Tax Local body/Municipal Corporation

3. At Project stage : (contd.,)
Nature of Approval required Licensing/Issuing
Authority
6. NOC Fire Department Local
Fire Department
7. Approval of Water lines and Sewerage Corporation
(Bangalore – BWSSB)
8. Consent of Air /Water pollution (Hotels Green category)
Pollution Control Department
(both at project stage and after the
hotel has become functional)
9. Approval for Garbage disposal & Sewage Corporation

4. At Project stage : (contd.,)
Nature of Approval required Licensing/Issuing
Authority
10. License for Power, Electrical installation, Karnataka State Electricity Board
Installation of Generator, Laundry
equipment
11. Approval for installing Cold storage Local Body
12. Sanction of LPG, furnace etc Ministry of Petroleum, Govt of India
and Gas Authority
(Indian Oil Corporation)
13. Project Approval to get Tax concessions Ministry of
Tourism, Government of India.

5. Tax & Levies
Details of Luxury Tax and VAT Applicable to Hotel Industry in
Karnataka
On Room Rate On actual tariff
Up-to 2000per room and above 12%
Rs.1000 to 2000 8%
Rs. 500/- to Rs.1000/- 4%
Up-to Rs.499/- Nil
Luxury Tax

6. Tax & Levies
Details of VAT Applicable to Hotel Industry in Karnataka
VAT on Non star
Hotels/
Restaurants
having
compounding
facilities – 5%
VAT on Star
Hotels/Stand alone
Restaurants -14.5%
Charged on Food, beverage, &
tobacco. On liquor 5.5% w.e.f
1/3/2014

7. Tax & Levies
Details of Liquor License Fee (Annual) Applicable to Hotel
Industry in Karnataka
•For Hotels with CL7 Lic Rs 3-6 Lakhs
•Liquor can be served in the hotel rooms & restaurant.
•For Hotels with CL6A Lic Rs 9.5 Lakhs
•Liquor can be served anywhere in the hotel.
•For Stand Alone Restaurants Rs 3.80 Lakhs
•For Beer & Wine Parlours Rs 0.50 Lakhs
•No Classification is required for getting Bar License
Liquor can be served anywhere in the hotel.

8. Service Tax & Excise Duty
- Registration is required with the central excise & customs department.
- The registration is both for service tax as well as tax deduction (TAN)
-Service Tax – has base component & Education Cess +
Higher Secondary Cess.
-Currently hotels charge 7.42% on Room Charges and 4.94% on
Food & beverage including liquor.
Actually the slab is 10.23% but the hotel association has got an
abetment or concession due to the VAT component.
-TAN – is toward the deduction done while paying for services
availed by the hotel eg: taxi, photography, & like
Tax & Levies

9. Tax & Levies
Excise Duty contd..
- Registration is required with the central excise & customs department.
-Excise Duty – has base component & Cess or Additional excise duty based on
the component / goods sourced.
Eg: imported liquor, food additives, processed foods, cars, etc.
There is a concession if the hotel / resort is earring foreign exchange.
The current rate varies from 30% to 100% on base value / invoice value

10. Tax & Levies
Professional Tax
This is part of the state levy. The commercial tax
department collects the same.
Currently any employee drawing a salary of Rs.15000/-
and above per month has to pay Rs.200/- per month as PT.

11. Tax & Levies
Provident Fund & Employee State Insurance
These two are the central government schemes applicable to all
organizations that employee 20 or more employees.
Currently all employees who draw salaries up to Rs.7500/- are covered
under the ESI plan. A sum of 1.75% of the basic salary is deducted &
paid to this account. Employees can avail medical treatment for self &
family.
Provident Fund is a saving or retirement fund. Currently 12% of Basic
salary + DA is considered & deducted from the employees salary.
Similarly the management has to pay 12% to the corporation.
When a employee leaves or retires this amount can be withdrawn.

12. Tax & Levies
Property tax – This is levied by the local Municipal Corporations. The slab
is based on the area of land, built up area / floor area & type of activity. To be paid
yearly.
Stamp duty – This is a state revenue department levy. This is charged as &
when the property is purchased of transferred.
Water tax – This is again a state levi. If the hotel draws water from the water
board this is payable. Current rate is Rs.6/- per 1000 lts of water (appx)

13. Tax & Levies
Income tax –
This is a central government tax. It is calculated on the
net income of the organization.
The slab is between 10% - 33% of net income

14. Tax & Levies
CST– The central sales tax. This is a tax for inter state sale of
goods. Any hotel or resort sourcing goods from other states will
have to pay this. The current rate varies between 5% to 12%
Octroi- few states (eg: Maharashtra) has this tax. Its for goods
that are being moved from production centers / industrial zones to
market places. It s state tax. The rate varies from place to place

15. Other LICENSE
• Weights & Measurement License
– This is required for all the scales & measuring
instruments in the hotel / resort.
• Eg: Store & kitchen may use weighing m/c, Peg measure in
bar
• POLICE LICENSE
– This is required when the hotel is built.
– At times the local stations may want staff information.
– Permissions for special events is a must.
– Foreign national registrations on day to day basis.

16. Other LICENSE
• IATA - International Air Transport Association
• Approval of this association required for tour
handling, ticket booking/or agreement with travel &
tour company.
• Those hotels that wish to extend this facility will
need this. However today with online industry being
very active hotels are opting out of this.

17. The Food Safety and Standards Authority of India
(FSSAI)
It has been established under Food Safety and Standards Act,
2006 which consolidates various acts & orders that have
hitherto handled food related issues in various Ministries and
Departments. FSSAI has been created for laying down science
based standards for articles of food and to regulate their
manufacture, storage, distribution, sale and import to ensure
availability of safe and wholesome food for human
consumption.
Other LICENSE

18. FSSAI Fees for hotels
Fees for FBOs Schedule – III ofFSS (Licensing and registration of Food Businesses)
Regulation, 2011 provides for registration / license fee per annum in rupees.
1. Fees for Registration Rs 100
2. Fees for License issued by Central Licensing Authority: Rs 7500
3. Fees for License issued by State Licensing Authority - Hotels
3 Star and above Rs. 5000
4. All Food Service providers including restaurants/boarding Rs. 2000
houses, clubs etc. serving food, Cant eens (Schools, Colleges,
Office, Institutions), Caterers, Banquet halls with food catering
arrangements, food vendors like dabbawallas etc.
5. Any other Food Business Operator Rs. 2000

19. Other License – Labour
This Act to regulate the employment of contract labour in certain establishments and to
provide for abolition of contract labour in certain circumstances and for other connected
matters.
Contractors shall have licence to employ contract labour. Application for licence shall be
made in triplicate in Form –IV to the concerned ALC along with fee and a certificate from
the Principal Employer in Form –V. Contractor must pay the security deposit at the rate of
Rs. 10/- for each workman. If the contractor is a co-opeprative society, the amount of
security deposit is only Rs. 5/- per worker.
Registration / licence fee is as under:
Number of employees: Registration fee: Licence fee:
20 Rs. 150/- Rs.100/-
21 to 50 Rs. 375/- Rs. 150/-
51 to 100 Rs. 750/- Rs. 300/-
101 to 200 Rs. 1,500/- Rs. 500/-
201 to 400 Rs. 3,000 Rs. 1,000/-
401 and above Rs. 3,750/- Rs. 1,250/-

20. Public Performance Licence
As the registered copyright society in respect of Sound Recordings PPL has
the authority to administer the Broadcasting / Telecasting Mobile telephony
and Public Performance Rights on behalf of a large number of important
music companies (290 music companies) in India who are its members.
Public Performance (Events) Licence - Playing of sound-recordings in an
event or show or concert or stage or dance-floor, etc. where performers
perform on stage or a designated area. Explanation:- A hotel or a shopping
mall which has obtained a mere "background music" licence needs to obtain
separate licence for its discotheque, restaurant, lounge bar, spa/health club
A hotel or shopping mall or banquet-hall or discotheque or ball-room which
has obtained a mere "background music" licence needs to obtain separate
licence for any Event (including shows, promotions, DJ parties, fashion
shows etc.) held in its premises.
Other License – PPL

21. Other License – Electricity & Fire
Electricity– The Deputy Electrical Inspector collects a fee
towards the electrical equipments – like transformers, gen-sets, &
lifts.
The current slab varies from Rs.1500/- to Rs.10500/- depending on
the installation. This is payable every year.
Fire –The Fire Department issues a license & collects a renewal fee for all resorts /
hotels which have 4 floors & above. Its not applicable to smaller hotels or restaurants.
The current slab -

22. MAYUR AADITYA RESORT
POONA-BANGALORE ROAD, NAVALUR, DHARWAD, KARNATAKA, -580009
Ph# 0836-246 1701 Fax# +91-836-246 5881 mail: connect@mayur-resort.com
DATA SHEET
AS ON: 02-09-2013
1) PAN NO : ABQPM7902C
2) TIN NO : 29550804858
(TAX IDENTIFICATION NO)
3) LUXURY TAX CERTIFICATE NO : 506465567
4) EXCISE LIQUOR LICENSE NO : EXE/DWD/CL-6A/01/2013-2014
KSBCL CODE - 23038
4a)ESIC Code : 58.1280.112
4b)PF Code : KN/50535
5) GOVERNMENT OF KARNATAKA :
I) DEPARTMENT OF LABOUR REGI. NO : 18/ /0084/2010 (VALID Until 31/12/’14)
II) DEPARTMENT OF W&M - REGI. NO : 211868 Dt 6/9/2010 (VALID Until 05/09/’15)
6) TAX DEDUCTION A/C NO (TAN) : BLRM 13192E
7) SERVICE TAX : ABQPM7902CST001
8) INDIA TOURISM CHENNAI - STAR CLASSIFICATION ORDER
THREE STAR - W.E.F: 11-06-2010 - VALID UPTO: 10-06-2015
9) Food Safety Std., Autho., of India License No.,: 1121/2314/00000/17 valid upto 6/5/2017

23. DATA SHEET
HUBLI-DHARWAD MUNCIPAL CORPORATION (WARD # 21)
1) PROPERTY TAX : 2013-2014 (rec no. 458 dt 29/4/13)
2) FORM ‘C’ : XA51/ZO/12/21
(BOARDING & LODGING LICENSE) (RENEWED 2012-2013) ON 4/2/11 rs.705/- rec no 74
3) FOOD & BEVERAGES LICENSE NO : XA51/ZO/12/21
(RENEWED 2013-2014) ON 11/6/13 rs.2260/- rec no 01
4) TRADE LICENSE : XA51/ZO/12/21
(DOT) (RENEWED 2013-2014) ON 11/6/13 rs.7550/-rec no 02
5) KEB (HESCOM) RR No: HTD 78. 250 KV Transformer & Demand load
Bank Accounts at Dharwad in Name of: Mayur Aaditya Resort
1) HDFC BANK CURRENT A/C NO: 12892000000470
P.B.ROAD, Near NTTF RTGS/NEFT/IFSC: HDFC 0001289
2) State Bank Of India CURRENT A/C NO: 31251924979
Gandhinagar Branch RTGS/NEFT/IFSC: sbin0005166
HOTEL VEHICLES:
•Tempo Traveler (A/c MINI BUS ) Registration No : KA-25 D-1325
•TATA ACE Registration No : KA-25/ P-6856
•Toyota Innova Registration No : KA-25/ D- 1602

24. Thank You