mumbai

Updated: Aug 27, 2016 01:28 IST

As the state government is set to roll out the Goods and Service Tax (GST), for which it recently convened a special cabinet meet, hotel and restaurant owners have warned of its aftermath. They also claimed that the patrons will be forced to shell out more money once the new tax regime is in place.

In addition, they also claimed that at least 50 establishments shut shop every year and the number will only increase with the introduction of the GST as it is getting difficult to make profit. The hoteliers have requested the state to look into the matter and offer relief.

At present non A/C hotels levy 12.5 % VAT on the total bills, while the ones with A/C charge 17.5 % [VAT (12.5%) + Service Tax (5%)].

Members of the Indian Hotels and Restaurant Association (AHAR) claimed that GST will make the entire trade unviable. The Centre wants to introduce GST so that it can axe the existing multi-tax system and bring ease of doing business.

“Patrons will cut down on eating out, as it will hurt their pockets. As it is business is down and further loss will only makes things worse,” said Adarsh Shetty, President, AHAR. He warned that unless the state provides some kind of relief, the situation will only worsen, thus forcing many hoteliers to look at other options.

Seconding Shetty’s opinion, owner of Shree Krishna Veg Heaven, Lalbaug, said escalation of prices by hotels will hurt patrons.

“It is ironic that businesses of those who supply hygienic food will suffer, while hawkers — who are hardly bothered about the quality — will flourish,” said Shetty.

Hotels and restaurant owners claimed that the existing tax regime has forced numerous establishments, including the age-old ones, to shut shop in recent years. In addition, shortage of labour has also made life difficult for them.