Hotels delegation wants banquet GST cut from 18% to 5%

The Bruhat Bengaluru Hotels Association on Thursday demanded that the 18% GST levied on outdoor catering be reduced to 5%.

The demand was made when a delegation of the association members met the Union finance minister, Arun Jaitley in New Delhi.

“In restaurants, food is served at 5% GST, but, the same food is served to banquets, events, outdoor, indoor and other catering at 18%. This abnormal GST is a burden to customers. Even restaurant owners are facing a lot of problems. So, the government should reduce the banquet GST to 5%,” wrote the association in a letter to the Union finance minister, a copy of which is with DH.

The association further pointed out in the letter that there is a difference in rates of cooking gas. For domestic gas the GST levied is at 5% and for commercial gas it is at 18%. According to the association, this needs to be rectified at the earliest, and be made 5% across the board.

"The idea of GST is one nation, one tax. But, here the same food is charged at different rates. The food served at restaurants draws 5% GST, but, when the same food is served at banquet halls the GST is 18%. Jaitley has understood the demand and assured us that it will be considered at the earliest. He agreed that a lot of illegal activities were happening because of this, which needs to be rectified,” P C Rao, the association's vice president and chairman - statutory laws, told DH from Delhi.

The association members said many events are hosted across the country during various occasions. So, 18% GST is a huge burden on customers because most caterers belong to the unorganised sector.

According to estimates, there are over 50,000 caterers in Karnataka, of which around 1,000 are in Bengaluru. But, just 25% are in the organised sector. Many customers are not aware of the unorganised sector caterers. When the customers pay up along with taxes, the caterers pocket the amount.

Veerendra Kamat, the association's treasurer said that as caterers are not making bills, there is widespread swindling of money. So, to make the whole sector organised, the government should levy 5% GST. The customers should insist on bills, he said.

P C Rao added that once the GST is made 5%, the association will take all measures to ensure that all caterers are registered.