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Restaurateurs cry foul, say 30 per cent loss after GST

Food lovers and restaurant owners cry foul on the clarification by Central Board of Excise and Customs  that a uniform Goods and Service Tax rate of 18 per cent will be charged.

Published: 16th August 2017 01:45 AM  |   Last Updated: 16th August 2017 07:12 AM   |  A+A-

By Express News Service

CHENNAI: Food lovers and restaurant owners cry foul on the clarification by Central Board of Excise and Customs (CBEC) that a uniform Goods and Service Tax (GST) rate of 18 per cent will be charged on takeaways as well as food served from a non-AC area of a hotel or restaurant if any of its part has air-conditioning.After the introduction of GST, restaurants have already lost a third of their business, according to T Natarajan, secretary of South India Hotels and Restaurants Association. “Restaurants that charged less in the non-AC area will lose business even further,” he said.

The tax has been hiked by 16 per cent in non-AC parts of restaurants and 18 per cent for takeaway outlets that charged no taxes earlier. “Customers who want to book party halls, get very disappointed and ask to waive or discount the GST amount,” said Benze Saravan, the president of Tamil Nadu Bar and Club Association.

Takeaway restaurants gained popularity because one can pick it up on the go and it’s easy on the pocket. “Even regular customers hesitate to order as often,” said the owner of a popular takeaway chain.

The government has increased the tax bracket directly by 10 per cent for air-conditioned restaurants. According to the 2013 service tax law, restaurants without air-conditioning could demand only a VAT of two per cent and restaurants with air-conditioning took an additional six per cent. But under GST, there is a uniform tax of 18 per cent even if one room is air-conditioned.

“Every Sunday morning, my wife and I drive to Thiruvanmiyur beach and eat mini-tiffin set for breakfast. Its price has been increased by Rs 20 now even in the non-AC section,” said Venkataramanan S, a resident of RA Puram. However, restaurant owners found a little comfort in claiming input credit. “Around 60 per cent of expenditure in restaurants is spent on raw materials, electricity bill and payroll. Since we can claim input credit, we don’t have to spend additional tax on purchase,” said Natarajan.

Bitter taste  

While according to the 2013 service tax law, non-AC restaurants could demand only a 2 per cent VAT, GST has brought in a uniform tax of 18 per cent even if one room in a restaurant is air-conditioned.

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