Hyderabad: Though the Union government has directed hotels and restaurants to reduce the GST on their bills to 5 per cent from 18 per cent from Wednesday, many city hotels and restaurants are yet to do so. They are confused about whether the new rate applies to only the food or is also for banquets and hotel stay.

At its 23rd meeting last Friday, the Goods and Services Tax Council reduced the tax rate on hotels and restaurants to 5 per cent from the earlier 12-18 per cent.

Union finance minister Arun Jaitley announced that all restaurants in the country will be levied a GST of 5 per cent and no restaurant will have the Input Tax Credit (ITC) benefit. The new tax rate is applicable to all AC and non-AC restaurants, except those in five-star restaurants, Mr Jaitley said. Telangana Hotel Association president Ashok Reddy said that many city hotels and restaurants have implemented the reduced 5 per cent food tax from Wednesday, November 15, “but some city hotels and restaurants are yet to implement the same due to confusion over whether to implement it only for the food or even for the banquets and hotel stay and some could not implement due to software updates”.

He added, “We are really happy that the price of eating out has come down. “We have observed that our business has come down by 18-20 per cent because of the 18 per cent GST. Now, eating out will become economical for the middle class. We had to face losses because of the 18 per cent GST.”

No cause for complaints, says CV Anand
The Legal Metrology department has directed hotel associations to strictly follow the new amendments. C.V. Anand, commissioner of civil supplies, Legal Metrology department, said hoteliers must strictly abide by the new guidelines and not give cause for complaint.

“If anyone is not following the amendments of the GST council it will come under MRP violation. We will watch for just two days and will then start raids on city hotels and restaurants depending on the complaints we receive from the public. Hotel associations need to play a more active role in communicating the same to everyone,” Mr Anand said.

The reduction in tax is welcome news for the aam admi as well. Dawood Khan, a city resident, said, “It’s truly a positive move. Basic service tax charged at restaurants was as low as 10 per cent 10 years back. Now more and more people will eat at restaurants with family and friends.”