Budget 2012: Tough to digest: Eating out gets costlier

PUNE: Food enthusiasts will have to pay as much as 10% more at restaurants because of the increase in service tax from 10% to 12%. In addition, the hike in peak excise duty from 10% to 12% will increase the cost of kitchen equipment, according to the Pune Restaurant and Hoteliers’ Association, which says it plans to compensate by increasing prices by 10 per cent.
Members of the association say they will write a letter to the finance minister, urging him to reduce the service tax. “A rise to 12% from last year’s 10% is a huge increase,” said Ganesh Shetty, president of the association.
“All food and beverage sales attract a service tax. Thus, an increase in service tax will have restaurant bills going up. Meanwhile, the excise hike will also affect us indirectly and the final outcome will be an increase in menu prices by almost 10%,” he added. “The rise in service tax and excise duty will definitely increase prices on the menu,” said Navtej Sawhney, partner at a lounge in Koregaon Park.
“Increasing expenses on raw materials will have to be compensated somehow,” he said. Sunil Chandani, owner of a restobar in Koregaon Park, agreed that the hikes would definitely lead to an increase in menu prices, but said that such increases would have be gradual.
“The menu price rise will happen in a phased manner, not abruptly. Initially, we will have to absorb some costs, while prices will be increased eventually after a period of two to six months,” said Chandani. For those who eat out on a regular basis, it’s bad news. “Last year the hike in liquor prices punched a hole in the consumer’s pocket and eating out became a one-off affair, said Roger Rodrigues, manager at a job portal. Bhuvan Chowdhary, a working professional, said, “An increase in service tax means that we will end up spending more when eating out and hence save less. Dining out will, therefore, become a luxury that only a few can afford.”
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