Eating out may get cheaper as meet to discuss hoteliers' woes

BENGALURU: Dining out is likely to get cheaper with the Centre being sympathetic to hoteliers' demand of reducing tax on AC and non-AC restaurants.
While the Centre has inprinciple agreed to reduce Goods and Services Tax (GST) on food served in AC restaurants from the present 18% to 12%, the GST Council has set up a group of ministers (GoM) headed by Assam fi nance minister Himanta Biswa Sarma to look into tax-related issues linked to restaurants.Hoteliers demand the tax rate be reduced from 12% to 5% for non-AC restaurants.
The five-member GoM that is expected to submit its report on October 20 is scheduled to meet on Sunday . Members said they had already received inputs from states, based on which they would make recommendations. The GST Council is expected to take the final call at its November 9 meeting. “Sunday's meeting will focus on the con cerns of the hotel industry under the GST regime. Rationalization of tax rates is the main issue to be discussed,“ said Haseeb Ahmed Drabu, finance minister of Jammu and Kashmir, a GoM member.
Hotelgoers from South Indian states are particularly feeling the pinch since the tax burden on food served at restaurants was much lesser in the value added tax (VAT) regime. In Karnataka, VAT on food at non-AC restaurants was 4%, while AC restaurants attracted additional 6% service tax. In Kerala, the tax rate was just 0.5% and in Tamil Nadu, Andhra Pradesh and Telangana, it was 2%.
“It's not practical from the business point of view. No business can withstand such a huge burden suddenly imposed on it,“ said Venakatasubbu, president, Tamil Nadu Hotels Association. Venkatasubbu, who is also the coordinator of All-India Restaurants Association (AIRA), said hotel business across India has seen a 30% dip in the three months after GST was introduced. He said a delegation led by AIRA would meet the GoM next week.
Another issue bothering hoteliers is that partially airconditioned restaurants are being taxed under the higher slab. “It is absurd that food being served at a darshini is being taxed at 18% just because the hotel has a separate AC section. Such discrepancies must be rectified,“ said P C Rao, president, Bengaluru Hoteliers Association. The same rate is being applied to takeaway items if the outlet is partially air-conditioned, which hoteliers and consumers feel is unfair.