Soon after GST rates were slashed for restaurants, those who eat out a lot are thrilled — they can now pay less for food. “There has been a substantial reduction in my bill. It has come down by ₹25, which means I spend less on food or rather the taxes,” said P. Radhakrishnan, a resident of T. Nagar, who has all his meals outside.
Across the State, restaurateurs and customers alike are happy with the reduction in rates in both AC and non-AC restaurants. “We can order out more now. Earlier, we used to get food from restaurants at least once a week when we were unable to cook. But after GST was imposed, our family cut that down to once a month since we felt spending the price of one person's meal on taxes was not worth it,” said Devaki Kannan, a resident of Mogappair.
After being hit by a deep decline in patronage across the industry, hotels like Saravana Bhavan had reduced prices. “We have fixed our rates so that every kind of customer can buy something. Prices of items like bajjis have been brought down and so also different meal combos to make our food more affordable,” said K. Kamalakannnan, a company spokesperson.
However, a section of restaurants has increased base food prices stating increase in input costs. N. Nagarajan of Dindigul said that several restaurants that increased the food prices soon after the implementation of GST have not brought down the prices yet.
Rise in base rates
A restaurateur in Chennai said that many fine dining restaurants have increased their base rates. “I think they feel if customers can bear 18% GST, they can also afford such rates." However, this could backfire she pointed out, as regular customers would know the base prices and could compare.
While the cost of vegetables and commodities has gone up, this is something restaurants will have to bear for a period. "The situation will hopefully get better in the near future and prices may come down again," R. Srinivasan of the Tamil Nadu Hotels Association said.
Restaurants have placed boards giving rates pre and post GST informing customers. “Though we don’t have input tax credit now, we don’t mind it. We did not have it in the VAT regime,” M. Ravi of Namma Veedu Vasantha Bhavan said.
"If any restaurants have increased rates, it is like committing suicide since the industry has suffered for the past few months with a drop of 30% in patronage. We have asked our association members to pass on the benefit of rate reduction to the customers," Tamil Nadu Hoteliers Association president M. Venkatasubbu said.
Elsewhere in T.N.
Madurai District Hotel Owners’ Association members said that they have not changed the base rates. For instance, a plate of dosa is priced at ₹45, idli costs ₹20, vada and chapati ₹45. R. Suresh, who has a chain of restaurants in Madurai, said that when GST was 12%, the hoteliers charged the above price. With the reduction in tax to 5%, the cost of items remain the same.
Revision of GST rates for restaurants has evoked a mixed reaction in Coimbatore. Those who run hotels that come under the 5% slab say business will pick up now.
"We saw a 20% drop in business when GST was introduced and the GST was 12% or 18%. The tax has come down to 5%. This will certainly increase footfall," said one of them.
In Tiruchi, restaurants have already started levying the new GST rate. The benefits have been passed on to customers," said Ravikumar, cashier at a leading restaurant in Tiruchi.
"Business has been extremely dull since demonetisation and subsequent GST implementation. The new structure is a relief to us. We hope that business will be revive soon," said an employee of an air-conditioned restaurant on Lawson’s Road in Tiruchi.
(With inputs from Deepa H. Ramakrishnan and Zubeda Hamid in Chennai, L. Srikrishna in Madurai, M. Soundariya Preetha in Coimbatore and C. Jaisankar in Tiruchi)
