Relief to Hotels and Restaurants

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Ref: AHAR/141/2020 23.04.2020

Shri. Narendra Modi Ji Hon'ble Prime Minister, Government of India.

Sub: Appeal for an immediate Relief to the trade of Hotels and Restaurants

Respected Sir/Madam,

Greetings from Indian Hotel and Restaurant Association.

We sincerely appreciate and thank the government for its prompt response towards the dangers posed by COVID-19 pandemic through immediate measures undertaken to safeguard the lives of our citizens.

Although closing of establishments like Hotels/Restaurants to the general public is a necessary step in the right direction, the industry which was already precariously perched is now facing an existential crisis due to the prolonged shutdown. A huge impact is already being felt and as the situation keeps evolving on a daily basis, most of the establishments may succumb to the pressure arising out of the uncertainty prevailing in the business environment with practically no hope of revival in the near future.

We support the Hon’ble Prime Minister’s view of addressing the needs of the workers during the shutdown but the onus of singlehandedly sharing the responsibility especially towards payment of wages for the period of shutdown will overburden the hoteliers who are at present providing meals round the clock not only to their existing employees but also to other stranded citizens, frontline essential service providers from both the government as well as the private sector and also maintaining daily overhead expenditure without any source of income.

We do understand that the top priority of the government is to combat the deadly virus and save lives. Urgent measures also needs to be undertaken to save businesses as well from annihilation and extinction in order to protect livelihoods.

We seek your kind intervention and help in providing immediate relief to the hospitality industry through a stimulus package for revival of business operations and saving millions of Jobs.
Our Suggestions for Relief to the Hospitality Industry

1) Loans: Interest and collateral free instant loans to be made available from banks or through a dedicated corpus raised by the government towards revival of business operations, payment of wages and the amount for the purpose of disbursement may be kept equivalent to the average monthly turnover of the establishment.

At present the moratorium period has been extended for three months which may be further extended for an additional period of six months together with waiver of interest amount considering the grave situation arising out of the pandemic COVID-19.
The RBI has reduced the repo and reverse repo rates. However, we suggest a further reduction of interest rate to the extent possible for a sustainable future.

2) Wages of Employees: Since there is complete shutdown of business operation due to the national lockdown and practically zero revenue; The principles of No Work No Wage should be made available for the period of shutdown together with government intervention and help in providing subsistence level wage for employees during the interim period and thereafter businesses may be allowed to renew their terms of engagement with existing employees through a mutual agreement for payment of wages during the subsequent period of revival post the lockdown in order to save maximum Jobs.

3) Capping of Lease Rent: Rents may be capped @ 25% of the agreement amount for the period of lockdown to balance the needs of both the Owners and Business Operators or alternatively a complete waiver of lease rental based on the size or type of premises like high street malls.

4) Statutory Dues under Employee Benefit Scheme: Contributions to Employee Benefit Schemes like Employees Provident Fund, Employee Insurance, Profession Tax, etc. may be directly credited to the individual bank accounts of the employees by the Institutions managing the corpus and aided by the government. Conditions of Bonus Payment to employees may be withheld and removed for the ensuing year, in order to conserve valuable resources in the hands of businesses.

5) Direct and Indirect Taxes: Payment of Direct and Indirect Taxes may be deferred by six months. All types of Recovery procedure for small businesses may be kept in abeyance for a year. Presently, under the direct taxes regime private limited companies are enjoying a concessional tax rate of 22% whereas, partnership firms are taxed at the rate of 30%, which may be reviewed and reduced to 22% in order to bring parity and conditions of mandatory audit under GST regime should be removed for businesses below the threshold limit of five crore annual turnover irrespective of the level of cash transactions as the same is beyond our control and completely at the discretion of the consumers.

The Hotel industry does not get tax credit for most of their inputs. Restaurant, catering, etc. are disallowed at present from claiming input tax credit. Hence, a duty drawback scheme for a couple of years will help us tide over the present unprecedented situation.
6) Payments to Utility Service Providers: Total and immediate deferment of payments due to utilities like electricity, water supply, gas, etc. supplied either through state run corporations or private enterprises for a period of not less than three months from the commencement of business operations post the COVID-19. All fixed charges towards supply of electricity, gas, water and telephone may be waived for three months and similarly electricity duty and taxes may be waived for a year and enforcement procedure for delay in payments may be avoided during the above period. Property tax may be reduced substantially for the current year and subsequent periodic increase in property tax may be kept in abeyance for the next three years.

7) Renewal of License: All the state, central, and local Licenses/Permissions/Approvals etc. may revalidated for an additional three months without requirement of Application or Fee for the same.

8) Force Majeure: A General Notification for invocation of Force Majeure Conditions due to the unprecedented situation caused by the pandemic, may go a long way in controlling costs and avoiding a host of litigations.

It is our earnest request to consider the above suggestions favorably in the interest of a speedy recovery for the hospitality industry from the current crisis.

Thanking you in anticipation,
With Warm regards,
For Indian Hotel & Restaurant Association,

Shivanand D.Shetty President, AHAR