Come April, people may find the bill too hot to handle in an air-conditioned restaurant; the Union Budget has brought such restaurants under the Service Tax net.

Several restaurants in the city have air-conditioned and regular dining areas. People prefer to eat in an air-conditioned hotel at any time of the year.

Those who prefer to go to the air-conditioned hall pay a little more for the food.

They will have to pay a higher rate now because of the 12 per cent Service Tax, says Jegan S. Damodarasamy, Executive Director of Sree Annapoorna Sree Gowrishankar group.

For instance, if the cost of a plate of idli is Rs. 22 in non-AC dining hall and Rs. 24 in an AC hall, those who go to the air-conditioned area will have to pay Rs. 27 now.

Not a luxury

“We do not provide extra service in an air-conditioned restaurant. It is not a luxury anymore to eat in an AC restaurant. Hence, the new levy is not needed,” he says.

The 12 per cent difference in cost is too high.

The restaurants are already hit by increase in input costs. When the price is increased, there used to be a buffer for seasonal variations. However, now the cost of labour, fuel and all other inputs are increasing and this has hit the hotels.

The Service Tax will mean bad for business.


It will have an impact on restaurants. The tax could have been for fine dine restaurants or it could have been a lower rate of tax, he adds.

This will discourage the mid-income families from eating out in air-conditioned restaurants, says Murugan of Gandhipuram in the city, who takes his two children to hotels regularly.


When the industries in Coimbatore were doing well, there were many who went with their family to air-conditioned restaurants even twice or thrice a month. Now, those hit by the slowdown prefer the non-AC ones, he says.

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