Over 2 lakh standalone restaurants and those attached to hotels in the State will down shutters on May 30 to protest against the proposed increase in tax under the Goods and Service Tax (GST).
Announcing this, M. Venkadasubbu, president, Tamil Nadu Hotels Association, told reporters that the Central government had proposed a levy of 5% for small restaurants with an annual turnover of less than ₹50 lakh, 12% tax for ordinary restaurants with an annual turnover of above ₹50 lakh and 18% for ordinary restaurants with air conditioning facility under the GST.
“We have been pleading with various ministers at the Centre to cap the tax at 5% since this will directly hurt the consumers. But since nobody is listening to us, restaurateurs in States including Puducherry, Kerala and Karnataka are thinking of joining in the all south India strike on that day,” Mr. Venkadasubbu added.
Association Secretary R. Srinivasan said that it was with great difficulty that many restaurants had become part of the organised sector. “We pay PF and ESI to employees. Now, this exorbitant increase in tax would mean a decrease in footfall and customers who cannot afford food in restaurants would go to street vendors. That will have a domino effect and many small eateries that have come into the tax ambit would shift to the unorganised sector and the quality of food will suffer,” he said.
‘Indefinite closure’
Former Association president M. Ravi said in many countries, food was not taxed and even where it was being done, the rates were kept below 5%.
“Even ice cream and soft drinks are being taxed at 28%. This will keep families away from restaurants. If there is no change in the stand of the Centre, we will have no other option but to go for indefinite closure,” he said.
“We are also asking that ethnic food, including idli, dosa and coffee. not be taxed at such high rates since it is consumed by the masses. International food chains can bear high rates of taxes,” Mr. Ravi added.
V.K. Subburaj, an executive committee member of the association, said many people who stayed away from home and consumed three meals a day in restaurants would be badly affected. “A person who eats for ₹300 a day would be paying ₹1,620 as tax per month, which is quite steep. He will have no option but to shell out the money as he has no time to cook at home,” he said. Similarly, families that spend ₹1,000 on a meal during an outing would have to shell out an additional ₹180 as tax.
Hoteliers have now pinned their hopes on the GST Council meet slated for June 3 in Kashmir.
Method of collection
Apart from the increased tax rates, hoteliers are unhappy over the way the taxes are to be collected. “They want three returns to be filed each month. They want to keep a tab on all our commercial transactions. If a dealer from whom we buy inputs does not pay GST, we will have to pay fines,” explained Mr. Srinivasan.
