Hotels, bakeries in no hurry to cut prices despite GST revision

Following the reformed Goods and Services Tax (GST) that came into effect on Monday, tax slabs on several dairy and packaged food products, excluding milk and curds, have been reduced to 5 per cent, lowering their retail cost.

The Karnataka Milk Federation (KMF) announced earlier that items such as ghee, cheese, and savouries, which earlier attracted 12 per cent GST, would now be taxed at 5 per cent. Ice creams, muffins, cakes, cookies, and chocolates, previously under the 18 per cent slab, also move to 5 per cent.

However, there is no revision in the rates of milk and curds. Ultra High Temperature (UHT) milk, sold in pouches such as Nandini Goodlife, will now be GST exempt, reducing its price further.

Conversely, products under Nandini’s recently launched Bounce brand will cost more, as GST has been raised from 28 per cent to 40 per cent, classifying them as luxury items.

A DH reality check across Bengaluru found that restaurants, bars and sweet shops remain cautious about passing on the benefits to customers.

A marketing manager at a city-based cloud kitchen said, “We still buy paneer at the old price because suppliers pocket the difference. While GST has come down on dairy products and some sauces, other ingredients have seen an increase, so we won’t be reducing menu prices”.

Hospitality players echoed similar concerns. Sahil Essani, bar manager at Muro, said, “It’s too early to tell whether the new slabs will make a real difference. If it does, we will definitely lower menu prices to provide the best value to our guests”.

According to P C Rao, president of the Bruhat Bengaluru Hotels Association, the change is limited in scope,

“Only three out of the 150 ingredients used regularly in hotels have seen a major drop. We welcome it, but a reduction in GST on commercial rent and cooking gas would make a far greater impact, since those costs are far higher than ingredients”.

Sweet shops and bakeries had mixed responses. Large chains such as Anand Sweets and Iyengar bakeries have already cut prices on namkeens, biscuits, cookies, cakes and certain dairy-rich sweets. Others, including VB Bakery, Thoms Bakery and Vidyarthi Bhavan, are still assessing pricing adjustments.

Supermarkets, meanwhile, face their own challenges. One major retailer noted, “We bought stock at 18 per cent GST, but must now sell at 5 per cent. On some items, that’s a 13 per cent gap. We hope the government refunds the excess tax paid under the old slab”.