No price hike, say officials, but restaurants get pricier: For customers, a ‘bitter taste’ of new tax regime

Restaurants without AC have been bracketed under the 12 per cent slab, while those with AC have to pay 18 per cent GST and high-end star properties are in the 28 per cent slab.

Written by Parthasarathi Biswas | Pune | Published:July 2, 2017 4:45 am
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THE first discernible impact of the rollout of Goods and Services Tax (GST) for Puneites was the 10 per cent increase in their restaurant bills on Saturday. Restaurants across the city have revised their rates due to the minimum 12 per cent slab imposed on them by GST. The revision by the restaurants comes even as officials claim that GST should, in fact, reduce the cost of eating out.

The GST, which came into effect on Friday midnight, replaced a variety of taxes such as service tax, C form and VAT. Under GST, specific slabs were announced for sectors and for the hospitality sector, broadly three slabs were announced. Restaurants without AC have been bracketed under the 12 per cent slab, while those with AC have to pay 18 per cent GST and high-end star properties are in the 28 per cent slab.

On Saturday, Surendrakumar Mankoskar, additional commissioner, GST Pune, had opined that despite the higher slabs, eating out would not become dearer. “The hoteliers would be saving on any incidental charges and they can easily pass it on to their customers,” he said.

But customers had a different experience on Saturday, as restaurants started charging over and above the printed bill. Non-AC restaurants added 12 per cent to their final bills, while the air conditioned ones increased their final bill by 18 per cent. The hike, right at the beginning of the weekend, came as a shock to Puneites, many of whom claimed that it was unwarranted.

“… the majority of my allowance is spent on food. I knew that GST is going to make a difference but did not know about the other challenges that it was going to bring. I ordered an item worth Rs 120 and the shopkeeper charged me Rs 145. Later, when I questioned him about the rates, he just said ‘GST’. When I asked for the bill, the actual rate was Rs 134… ,” said Shreya Das, a student.

Deepti Patil, a resident of Pimpri, said, “I don’t understand why the government had to increase the tax for eating out. It means the government wants us to eat only at home. Also, the hotel business will take a hit.”

Ganesh Shetty, president of the Pune Hoteliers’ Association, defended the increase in bills by pointing out that earlier, the taxes paid by the establishments were lower. “The maximum tax for non-AC restaurants was just 5 per cent and for AC restaurants it was 11 per cent…,” he said. Now that GST has come into effect, the establishments are being forced to charge extra as the hike in tax is too large an amount to be absorbed by them.

Responding to the observations of the additional commissioner, Shetty said the inputs used by the restaurants do not offer any credit options, as agriculture commodities are not in the GST net. The GST on the bill is divided into 6 per cent each, for state GST (SGST) and central GST (CGST). “Excluding the 12 per cent GST, ice creams have 18 per cent GST, and cold drinks have 28 per cent GST,” said Shetty.

(Inputs by Gayathri Nandhakumar)

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