HYDERABAD: The caterers are wondering why the Goods and Service Tax (GST) imposed on them is 18 per cent. Caterers argue that their service are at most times in open door non-air conditioning settings and it’s unfair for them to be taxed on par with AC restaurants. Those involved with the sector feel that unfavourable taxation will lead to loss in business and subsequent unemployment as customers might choose to subcontract various services for a function/event to avoid GST.
“Will you be willing to to pay 18 pc over a `1.5 lakh catering bill or would you choose to separate contracts for non vegetarian, vegetarian, ice creams and water supply? People will try to use such methods to avoid paying GST. The caterer is end loser,” said Ashok Reddy Kancharla, owner SYN caterers and president of Hyderabad Hotels Association. Under GST, the catering business has been clubbed under the tax slab of 18 per cent along with the air conditioned restaurants. Caterers have been calling this move by the GST council ‘unfair’.
With wedding season starting in July end and lack of clarity to their concerns from Customs and Central Excise department, the caterers have a range of reasons to worry about. “We do not know if we should start levying GST yet or wait for further clarification from government,” said T Venkatesh, a caterer. Caterers had through hotel associations tried to get clarification from Central Board of Customs and Excise on Friday. However, apart from clarifying a few doubts, department officials gave only assurances of clarity in weeks to come.
The sector is also concerned about possibility of double taxation. “All service boys who do catering are outsourced. We pay them `400 to 500 a day for their work but under GST regime, their work is a service which makes us wonder if they too need to collect GST,” said Ashok. Most of our customers are known to us and so we have to give a discount and it’s not clarified if we have to levy tax after tariff or before, he added. Catering business has been clubbed with hotel sector in GST regime. However, unlike other sectors that can claim Input Tax Credit (ITC), hotel business do not have much items that they can claim ITC on.
“All packed items, such as have GST but 80 pc of the ingredients sector uses to cook don’t come under GST,” said Venkat Reddy, president, S State Hotel Owners Association.“If you buy these items from a wholesale store, there is no tax on and hence we will not be able to claim input tax on these items and so we cannot offset these charges, he added.
Traders not passing on benefit of GST to buyers: CATCO
Hyderabad: Many traders are not passing on the benefit of GST to consumers, Confederation of All Telangana Consumer Organisations (CATCO) has alleged and warned that lack of adequate resources for legal metrology department officials to execute their job will lead to state lose revenue.
“There is about 50 pc shortage of staff in the legal metrology department in rural TS,” said N Srinivas, chairman, CATCO. “If the government wishes to capitalise on revenue GST would bring it, it should focus more on strengthening consumer forums and other departments meant to serve the public,” he suggested. “Under new rules, traders have to stick new price tags but not many outside Hyderabad are doing it,” he said. At present there are no separate heads for consumer affairs and legal metrology departments in state.