Tourists heading to Puducherry to celebrate New Year will have few options for entertainment. Unlike in previous years, most hotels in the Union Territory will not organise any events on New Year’s Eve – especially not music shows. They are protesting against the “strict imposition” of 25% entertainment tax and 28% Goods and Services Tax. In addition, music licensing companies want Rs one lakh each from any hotel that plays music.

These are not new levies, but it is only now they are being strictly enforced. Until last year, the Puducherry Hotel Owners Association pointed out, they were “not forced to pay 25% entertainment tax”. They could split the total value of a ticket and pay tax on its components. For example, the cost of a ticket for a music show could be broken down as charges for food, liquor and entertainment. Since most of these components are taxed at less than 28%, hotels ended up paying less, explained Vimal B, manager of the Shenbaga Hotel.

But this year, Lieutenant Governor Kiran Bedi is keen on strictly enforcing both GST and entertainment tax. “We won’t gain anything from hosting events if we have to pay these taxes,” said D Lawrence, vice president, Sunway Manor hotels. “The DJs demand 10 times the usual fee for New Year parties.”

So most hotels will serve only food and drinks. Only a few establishments will have music shows this year. They include the Promenade Hotel, which will host the bands Dhani’s Trio and Isean at their Storyteller’s Bar.

Favoured destination

Puducherry is one of India’s favoured tourist destinations, especially for Christmas and New Year holidays. In 2017, according to the Tourism Department, the Union Territory received 16.63 lakh visitors. They included 15.31 lakh Indians, up from 13. 98 lakh in 2016, and 1.17 lakh foreigners, up from 1.31 lakh the previous year.

This New Year’s Eve as well, all of the nearly 600 hotels are fully booked. This is why room rates have not come down despite the subdued festivity as a result of the hoteliers’ protest.

In 2017, nearly all hotels hosted live music bands or DJs to entertain their guests on New Year’s Eve. There were concerts by the bands Thikuddam Bridge and H20, and even a “rain party”.

“This year, we have to be content with the fact that all rooms are booked,” said Ravindra Raju, general manager of the Accord Hotel. “Hotel Owners Association has taken a decision not to play music this year.”

Oulgaret Municipality, which encompasses many of the major hotels, clarified on Thursday that the 25% entertainment tax was to be levied only on the entry fee for events organised by the hotels. “This is a nominal amount,” argued M Kandasamy, the municipality’s commissioner.

Update:

Puducherry Municipal Commissioner M Adharsh spoke to Scroll.in on Friday insisting that the hotels were mistaken. “There are no new tax levies. There is no change in the entertainment tax structure that was followed last year. The 25% entertainment tax is levied on the entry fee, which can be as low as 25% of the ticket fee. The hotel owners’ association has been misinformed.”