Palampur hoteliers welcome new law to regulate homestays

The Palampur Hoteliers Association has welcomed the state government’s move to introduce new legislation to regulate the functioning of homestays in Himachal Pradesh. The objective of the new law is to protect state revenue and curb the growing number of illegal homestays operating in violation of existing norms.

Speaking to mediapersons in Palampur, Vinay Sharma, president of the Palampur Hoteliers Association, said the new policy should now be strictly enforced to ensure that the organised hotel industry does not suffer. He pointed out that unregistered homestays have mushroomed in Palampur, Baijnath, Bir and other areas of Kangra district, posing a serious threat to the organised hospitality sector and eating into government revenue.

“As per the government norms, a homestay with up to four rooms is exempt from the Goods and Services Tax (GST) and other levies. The maximum tariff allowed is Rs 2,500 per night. However, in the absence of effective enforcement, many illegal homestays with more than four rooms have come up in rural areas and are charging higher rates in blatant violation of the rules,” he said. This, Sharma added, is causing massive revenue losses to the state.

He further noted that while hotel owners pay 18 per cent GST on room tariffs, property tax, and other mandatory levies, most homestays contribute nothing to the government. “It is unfair that despite complying with all legal obligations, including taxes and regulatory requirements, hotels are left vulnerable to unchecked and illegal tourism operations,” he added.

Sharma also pointed out that many unregistered homestay properties continue to offer rooms online without being listed with the Tourism Department. These properties avoid taxes and undercut hotels by offering lower prices, further impacting the hotel industry.

In addition, hotels are required to comply with environmental regulations, labour laws, minimum wage provisions, and pay commercial rates for electricity and water. In contrast, illegal homestays often use domestic electricity and water connections and operate without oversight.

“We are not against tourism units in rural areas, but they must function legally,” said Raj Awasthi, another hotelier from Palampur. He urged the government to direct the Tourism Department to conduct a comprehensive survey to identify unregistered units and ensure their registration and compliance with state regulations.

Himachal Tribune