Some restaurants charging VAT, service tax too besides GST

A week after the Goods and Services Tax (GST) came into effect, several restaurants in the city are charging Value Added Tax (VAT) and service tax in addition to GST and cheating unsuspecting customers.

In the new tax regime, restaurants without air conditioning come under the 12% tax slab while restaurants with air conditioning can charge 18% GST. Earlier, restaurants used to charge VAT and service tax which have now been absorbed into GST. However, many flout rules and calculate GST on prices which already include old taxes.

A hotel on RV Road in Basavanagudi used to charge Rs 120, inclusive of all taxes, for one plate of biryani. Now, they are charging 18% GST on the old price and selling the dish at Rs 142. The situation is similar in several restaurants across the city with only a few calculating GST after deducting VAT and service tax.

“I went to a restaurant with my friends and on a bill of Rs 2,000, we were charged Rs 360 GST. Earlier, for the same food, the bill, including taxes, used to be within Rs 2,000,” Sandeep, a customer in Koramangala, said.

A bakery in Koramangala, which used to charge Rs 885, inclusive of taxes, for a ‘Chocolate Fantasy’ cake is now charging an additional GST of Rs 160 for a total cost of Rs 1,045. Customers now have to pay 18% GST, in addition to the 14% taxes being charged earlier. When questioned about this, the owner said that they raised the prices of items because the cost of ingredients and salaries of employees have also risen.

Some eateries are still charging the old prices for items on their menu. “We have ingredient stocks which we bought before July 1 so we will continue to charge the old price till these are exhausted. After that, we will have to change the prices on the menu based on the prices of ingredients,” said Vijay, owner of Vishnu Sagar Hotel in Koramangala.

Nagarjuna restaurant on Residency Road has, however, kept its prices unchanged by not passing on the tax burden to the customers. Other restaurant owners complain that the number of customers eating out has reduced since the GST rollout.