With the rollout of the Goods and Services Tax (GST), there will be a considerable impact on services provided by hotels on food and alcohol.
The impact of GST will be lighter on the pocket as the tax on food and drinks in air-conditioned restaurants will drop from 20.5 per cent to 18 per cent, whereas non-air-conditioned restaurants will levy a 12 per cent tax on food and drinks. Till now, customers had to pay a tax component that consisted of a 14.5 per cent VAT and a 6 per cent service tax.
The restaurants having licence to serve liquor (with full ITC) will levy a tax of 18 per cent, while those not having the facility of air-conditioning or central heating at any time during the year and not having licence to serve liquor (with full ITC) will levy tax of 12 per cent. The 5-star hotels will come under the highest slab of 28 per cent GST.
Liquor had a 6 per cent service tax across segments, which has now been withdrawn.
GST, which was launched on the midnight of Friday at a special ceremony in the Central Hall of Parliament is the most sweeping tax reform since Independence. Prime Minister Narendra Modi on Friday said the GST will be “not only a tax reform but an economic and social reform as well” that will unify the nation, “check corruption and end harassment at hands of officers”.