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Desi eateries in Chennai lose competitive edge to MNC brands

Under the new regime, five-star hotels come under the 28 per cent bracket, while three-star hotels attract 18 per cent.

Published: 01st July 2017 10:26 PM  |   Last Updated: 01st July 2017 10:44 PM   |  A+A-

For representational purpose | IANS

Express News Service

CHENNAI: One thing that consumers will have to live with in the GST era is the length of bills in restaurants, supermarkets and homegrown hotel chains. In contrast, the bills you run up in eateries run by multi-national brands like Pizza Hut have come down a little. That’s just day one of GST.

Under the new regime, five-star hotels come under the 28 per cent bracket, while three-star hotels attract 18 per cent.

With different food items placed under different slabs, restaurants are calculating tax for each item separately before computing the grand total. As a result there will definitely be more folding to do before you stuff your bill into your wallet. For example, if you want to buy juice, sweets and a dosa from a restaurant, each commodity will have to be taxed separately under its respective tax slab. The onus is on the customer to check if the right tax slabs have been applied.

Price increase, decrease

As expected, prices of food in eateries like A2B, Hot Chips, Vasantha Bhavan and Buhari have increased while Pizza Hut, Domino’s and Tovo, known for their huge taxes, will be cheaper to eat at. This is because the GST slab for all air-conditioned restaurants has been set at 18 per cent. With brands like Pizza Hut hitherto charging around 30 per cent pre-GST, bill amounts at such brands have dipped now. But for homegrown brands, which earlier were charging lower tax, the bills risen.

“We used to charge only 2.5 per VAT. But now since we have started following GST, the prices of our food items will increase,” said a manager at A2B Anna Nagar.

A dry run conducted by Pizza Hut in June confirmed that there is a price benefit to their customers as a result of GST. According to Rakesh, a manager at Pizza Hut Anna Nagar, reducing their taxation from 30 per cent (VAT 14.5%, service tax 4.5 %, service charge 10%) to 20 per cent in June (which was much closer to the 18% slab it now comes under) resulted in a loss of only Rs 35,000.

A medium pan-crust Chicken Pepperoni Pizza now costs Rs 578 compared to Rs 637 before GST, while chicken biryani at Buhari went from Rs 130 to Rs 150 post-GST.

Confusion

While larger food chains such as Adyar Ananda Bhavan, Hot Chips and Pizza Hut prepared in advance to implement the GST rollout, smaller eateries used manual billing to tax customers Monday, causing some confusion.

“It will take us a few days to update our billing system but we are taxing customers according to GST,” said a manager at Parvati Bhavan in Anna Nagar.

As some restaurants in Ampa Skywalk hadn’t updated their billing systems, the management provided the food court common bills with a GST update to avoid confusion.



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