Non-AC restaurant bills to go up, outdoor catering dearer

Non-AC restaurant bills to go up, outdoor catering dearer

With GST being rolled out in the coming days, restaurant bills in Karnataka are bound to appear a lot different from what they are at the moment.

Come July 1, and the rollout of the Goods and Services Tax pan-India, non-AC restaurants will invite a tax of 12% over each billing, which would be passed onto the customer, while AC restaurants will be doing the same with 18%.

Currently, Karnataka charges a VAT of 4% on non-AC restaurants, while a VAT of 14.5% is being levied on AC restaurants, apart from a service tax of 6%.

Explaining the current tax breakup for AC restaurants, Texmex Cuisine India CEO Ashish Saxena said, “We fall under the AC category of VAT, which is 14.5% on food, apart from a service tax of 6% — which also includes the Krishi Kalyan Cess (0.2%) and the Swachch Bharat Cess (0.2%). When we total VAT with service tax, the total tax comes to about 20.5% for food in Karnataka.”

He continued, “Under the GST regime, we will be charging a tax of 18%. From a customer’s perspective, that’s a relief of about 2.5% on the total bill, with regard to taxes.”

The company owns and operates the Chili’s American Grill & Bar in South and West India.

It may be observed that with the GST coming in, prevailing taxes and cesses that are added to a restaurant bill today will be subsumed into the new tax, which would differ between types of restaurants.

While high-end AC restaurants may rejoice the onset of GST, non-AC restaurants remain watchful.

The said 4% of VAT laid on non-AC restaurants is currently being borne by the eateries themselves, and not collected from the customers.

“Presently, non-AC restaurants don’t collect anything from the customer. However, in the case of AC restaurants, a service tax of 6% is being collected,” Bruhat Bangalore Hotels Association Vice President P C Rao told DH.

“After GST, all non-AC restaurants will have to collect 12% GST from customers, which is a heavy burden on them,” he added.

Similarly, for smaller darshinis with up to Rs 75 lakh in turnover, without input tax and credit, one has to pay 5% composition tax as part of GST.

“Even outdoor catering will be charged a GST of 18%. For eg, for a marriage, if the catering bill foots to Rs 5 lakh, one has to cough up to Rs 90,000 as GST,” Rao said.

Also, restaurants within five-star hotels will invite a GST of 28%. Meanwhile, with alcohol not being placed in the ambit of GST, bars and pubs have their own doubts.

“The move will increase the amount of taxation, and returns that need to be filed since alcohol is kept out of its ambit, and there’s still a lack of clarity as to how much input will be allowed, and how much will not,” Riyaaz Amlani, National Restaurant Association of India President and CEO & MD of Impresario Entertainment and Hospitality said.

“Previously, a bar would give one single bill, but hereon, a separate bill for alcohol, and a separate bill for food with GST included may be furnished,” he quipped, highlighting the fear of totalling and procedural errors during billing.

The restaurant industry in India is part of a Rs 3,08,000 crore business, out of which only 35% is organised (who have valid licences and documents). Restaurateurs opine that the government must take steps towards getting more unorganised players to get organised, so as to share the burden of the tax regime.

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