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of <h1>Expenditure-tax Act Clarification: Luxury Tax Included in Room Charges Calculation for Hotels, Section 2(10) Explained.</h1> The Expenditure-tax Act, 1987, applies to chargeable expenditures in hotels where room charges are Rs.1,200 or more per day per individual. Previously, this threshold was Rs.400 until June 1, 1992. The Central Board of Direct Taxes clarifies that luxury tax and similar state taxes are included in the 'room charges' calculation under section 2(10) of the Act. For example, if a hotel charges Rs.1,150 plus a 7% luxury tax, the total exceeds Rs.1,200, making the hotel liable for the expenditure tax. However, luxury tax is not part of the chargeable expenditure under section 5 of the Act.
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