Shruthi H M By

Express News Service

BENGALURU: Ever since the GST tax slabs were announced, restaurants across the country have criticised the government for high taxation, which would have a direct bearing on the food price points in restaurants. Last week, restaurants under South India Hotels and Restaurants Association (SIHRA) kept their shutters down for a day, as a mark of protest.

There are four slabs of GST rates applicable to the service sector: five per cent, 12 per cent, 18 per cent, and 28 per cent. Small restaurants with a turnover of Rs 50 lakh will be taxed at a composite rate of 5 per cent, non-AC restaurants and those restaurants with no liquor licence will attract 12 per cent, restaurants with AC 18 per cent, restaurants with a liquor licence 18 per cent tax, and AC restaurants inside 5-star hotels 28 per cent.

In the case of hotels, there will be no tax for those with a tariff lower than Rs 1,000. Those in the range of Rs 1,000-2,500 will be at 12 per cent, the rate for hotels between Rs 2,500 and Rs 5,000 per day will be 18 per cent and those with a tariff of Rs 5,000 and above per night will be taxed at 28 per cent.

Banquets and outdoor catering will attract 18 per cent tax.

Restaurant owners say that the 12 per cent tax for non-AC restaurants will be heavily burdened, while AC and five-star restaurants will be the worst-hit.

“There will be no option for us but to pass on the tax burden to customers, which means increase food prices in restaurants,” said Veerendra Kamath, member of Bruhat Bengaluru Hotels Association. He added that this would lead to mushrooming of roadside and unauthorised restaurants.

Riyaaz Amlani, president of National Restaurant Association of India, said, “While we applaud the government’s effort to keep GST at 5 per cent for restaurants below Rs 50 lakh and 12 per cent for restaurants without AC, we are disappointed with the high GST slab of 18 per cent for organised restaurants and 28 per cent for 5-star restaurants. This will not go a long way to promote tourism and tourism-related jobs.”

However, hotels that are into the lodging segment have welcomed the GST rates. “We welcome this step by the government. A lower tax rate for budget hotels sector will ensure that the industry’s quality upgrade continues while delivering standardized accommodation to millions of middle-class travellers. This will also save and create thousands of new jobs which could have been impacted under higher tax-rates. Hotels are the single biggest contributor to the tourism sector, which accounts for 7.5 per cent of the GDP. The industry is expected to contribute $280 billion to the GDP by 2026 and will pass on benefits of uniform taxation across the country to travellers,” said Ritesh Agarwal, founder and CEO, OYO Rooms.