Share prices of hotel companies rallied 3% to 20% intraday in Monday's trading session after the government slashed corporate tax and GST rates.
Highest gains were recorded in Taj Hotels, that was trading 19.50% higher, followed by over 11% advance registered in Royal Orchard and Savera Industries, 10% rise in Jindal Hotels and Lemon Tree Hotels, over 8% surge in Kamat Hotels and Indian Hotels, 7% rise recorded in Mahindra Holidays and Resorts and Oriental Hotels, nearly 6% advance in Hotel Leela, Advani Hotels and Sinclairs Hotels.
Stocks of Sterling Green Woods, Country Club Hospitality & Holidays, H.S. India, EIH Associated Hotels, Lords Ishwar Hotels, Asian Hotels and Viceroy Hotels rose nearly 5%.
EIH Ltd, TGB Banquets and Hotels, Gujrat Hotels, Polo Hotels and Viceroy Hotels were trading higher by 3% on the BSE. Compared to this, the hotels industry gained 5.75% in Monday's trade.
However, Cindrella Hotels, Hotel Rugby declined nearly 5% in Monday's trade, followed by Royale Manor Hotels and Industries, MAC Charles and Best Eastern Hotels, each declining over 2% lower, while Asian Hotels and Pheonix Township remained unchanged.
In a bold move to grip the nation out of economic recession fears, FM Sitharaman announced a reduction in the corporate tax rate from 34% to 25.17%, inclusive of all cess and surcharges, for domestic companies as compared to 34.9% earlier. For companies less than Rs 400 cr turnover - effective tax comes down from 29.15% to 25.2%
Additionally, the Finance Minister also announced several revisions to the GST rates following the 37th GST Council meeting scheduled on Friday, in which the government slashed rates on hotel room tariffs and hiked on caffeinated beverages up to 40%.
For hotels, FM Sitharaman said that rooms which charge less than Rs 1,000 per night, no tax would be levied. She added the rooms which cost between Rs 1,000 to Rs 7,500 per night, will now levy a tax of 12% compared to 18% earlier, while the rooms which charge more than Rs 7,500 will now levy 18% tax, down from 28%. Apart from these, the government has also cut GST rates on slide fasteners, wet grinders, and marine fuel by a large margin.
By Rupa Burman Roy