GST eats into restaurant business, sales down 25%

GST eats into restaurant business, sales down 25%

BHOPAL: Family outing on dinner once a week at a decent city hotel was a routine for Sunil Kumar Batra, a senior executive with a private company posted in the state capital. But, after the new tax regime under Goods and Service Tax (GST) was rolled out on July 1, he is thinking twice before stepping out with family for dining.

There are many people in the city like Batras, who are yet to come to terms with the new tax regime and have cut down their visits to the favourite restaurants and hotels.

Thus, the losers are the medium class hotels. Business of these hotels has been hit by more than 25% post GST regime. Though, it is too early to reach a conclusion, but hoteliers say the initial trend during the first fortnight is disturbing.

An executive of Jehanuma Palace Hotel said, "People coming to our hotel won't mind coughing out that extra bucks for good food."

Earlier, in medium class hotels, the food was taxed at a rate of about 11% - that included 5 % VAT and 6% service tax after some rebate. But now the food has been taxed at a flat rate of 18%.

Now, a dal fry or butter chicken would have three tax rates in the same market. Hotels with a turnover up to Rs 20 lakh are not taxed, those upto Rs 75 lakh would have to pay just 1% tax and beyond that 18%, a hotel owner explained. "Rate of these stuff would have varied otherwise also depending upon the hotel class, but why tax them differently?," he asked.

The GST is all set to affect the wedding business in the coming winters. Booking inquiries have shown that higher tax slabs are putting off people. Harvinder Singh, owner of Amer Greens told TOI, "GST has disturbed the budget of the people for big banquets. Inquiries suggested that people may now start preferring caterers over hotel parties."

Source::: The Economis Times, dated 12/07/2017.