Luxury tax proposal upsets gym owners

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Spa owners are concerned high taxes will discourage their clients

The owners of health clubs, gym and spas are worried about their footfalls as Delhi government’s proposal to levy luxury tax on their services will not yield good results. Gyms and spas have become an integral part of Delhiites’ day-to-day life and the “extra tax” will be seen as a burden and may ultimately force many to give up their membership.
The provision to levy luxury tax on banquet halls, gymnasium and spas has been made in the Delhi Tax on Luxuries (Amendment) Bill, 2012 which was passed in the Assembly recently. As per the Bill, banquet halls, gymnasium and spas having an annual turnover of `5 lakh will have to pay luxury tax on their services.
Amit Sareen, owner of the gym Fitness Finesse, thinks that levying a luxury tax will burden people unnecessarily. “In today’s time, a gym has become a basic need. It’s not a luxury anymore. People join gyms to stay healthy. Many are hesitant to pay service taxes, how will they deal with something like a luxury tax? The `5 lakh limit is nothing, as gyms that are doing well can even have a monthly turnover of `5 lakhs. But then you can’t treat yoga or gym as luxury,” says Amit.
Simmi Ghai, owner of the spa Xpressions thinks that levying luxury tax on every other spa, gym and health club isn’t a good idea. “If it were only on the five-star outlets, it would have been okay. But then there are many health clubs and spas that cater to people from middle-class. Not everybody from that section will be able to pay the luxury tax, ultimately affecting the footfall badly,” says Simmi, who thinks no offers or discounts from the owners of these places can salvage the situation.
Some, instead of charging luxury tax are planning to increase the fee. Kiran Sawney from Fitnesolution says they are planning to raise the fee by at least 10 per cent. “We have no choice. And you can’t say that it won’t affect the aam aadmi as they will eventually have to pay it. How are the gyms and spas expected to meet the costs otherwise? Also, I’m expecting a few of clients to withdraw as not everyone can afford a hike in prices,” she says.
Dr Sangeeta Chauhan, president of All India Hair and Beauty Association, is planning to organise a protest against this “underserved tax”. She says that in the last few years, people from all walks of life have started availing these health and beauty services. “Levying more taxes would mean discouraging customers. And if we try to lure customers by coming up with interesting offers, our services are going to deteriorate. In every way, there’s a loss. Government should rethink about this decision,” she says.
Regular customers too think the same. College student Aparna Chaudhary says that the customers are at the utmost loss. “We will be paying more for services that we know wouldn’t be that good,” she says.

With inputs by Shruti Badyal