ALAPPUZHA: Finance Minister T M Thomas Isaac on Saturday said the price of hotel food will become dearer by 10-13 per cent, post-GST. Following a meeting with Hotel and Restaurant Association representatives here, Isaac said, “There was no tax on hotel food earlier. Following GST, taxes of 18 per cent and 12 per cent have been levied on AC and non-AC hotel food, respectively.”
“The government has discussed the matter with hotel owners. They have agreed to slash the price of food by 8 per cent in AC hotels and 5 per cent in non-AC hotels as input credit. So the price hike can be reined in by 5-13 per cent,” he said.
He urged traders to call off their proposed strike on GST. “The strike called by merchants’ association was due to a misunderstanding. So they should withdraw the strike. The government is ready to talk to them. Hotel owners can now reduce the price of food items as the rate of chicken will be slashed to `87 from Monday,” he said.
Input credit
A product is manufactured using various raw materials. After GST, the taxes of many raw materials were slashed. Naturally, the price of the end product decreases. The savings as a result of tax rebate for raw materials is called input credit.