He adds that the increase in service tax from 5 per cent to 8 per cent will have ramifications across the value chain. While the impact of VAT on the industry is a subject that has to be studied separately.

Since hotel industry in addition to generating incomes is also considered amongst the most effective employment creating sectors it continues to be exempted from service tax. According to him, it is unfortunate that the same logic was not applied as far as the media and entertainment sector was concerned.