ITC Hotels area manager (east) and ITC Sonar Kolkata GM Ranvir Bhandari said the announcement would help the industry promote Kolkata as a prime destination for corporate meetings, incentives and conferences.

"The Federation of Hotel & Restaurant Associations of India has been lobbying for a reduction of luxury tax for a long time. Hence, the announcement comes as a major step in the right direction. It will be a boost to setting up of more hotels in the state that is witnessing an industrial resurgence," he said.

Bhandari, however, felt the exemption bar could have been raised to Rs 2,500 as no decent property in the city was priced below that level. "Even the non-star hotels are charging tariff in excess of Rs 2,200," he pointed out.

Oberoi Hotel GM Amitabh Rai, however, said the restructuring in luxury tax exemption slab would benefit smaller hotels in the city and encourage budget hotel players to make forays into district towns. "In the districts, one can offer decent facilities for Rs 800-1,200. Hotels can peg their tariff at Rs 999 and avoid the tax. This will promote the industry as well as tourism. Employment will obviously receive a boost," he said.

Hotel Hindustan International director operations Vinay Jaiswal agreed. "We are scouting for a property in Siliguri. The finance minister's budgetary proposal comes as a huge confidence booster," he said.

Rai also felt the tax slash would boost tourism in the state. "People are increasingly becoming aware that India is not that cheap or affordable as it used to be a decade ago. Hence, any reduction in prices is a huge incentive," he said.

Amber Restaurant MD and president of Hotel & Restaurant Association of Eastern India president SK Khullar said the association had been lobbying on the issue for several years and was glad that the government had finally taken notice. "We had urged them to abolish luxury tax altogether. But a 50% reduction is also good," he said.