Rajahmundry: Hoteliers not happy with new GST slab

Rajahmundry: Though the Centre has brought the GST down to five per cent from 18 per cent recently on food and beverages, hoteliers say that there is not enough gain for them as their margins of profit are dwindled while benefiting the customers. According to them, with GST pegged at 18 per cent, they had the option to claim  Input Tax Credit. For instance, if a hotel has to pay Rs 12 lakh GST per month to the government, it used to pay about Rs 8.5 lakh while Rs 3.5 lakh would be secured in the form of ITC. With the GST slashed to five per cent, the hoteliers cannot claim ITC and will have to pay whatever was due.

With the benefit to claim ITC, some hoteliers used to procure raw materials from wholesale suppliers with no bills that used to help them bring down the quantum of GST to be paid. Only a few small-time restaurants braving the risk of being caught would, however, do that. A majority of hoteliers, however, say that they can assess the benefit from five per cent GST only at the end of November after drawing comparison of their GST returns filed for October and November.
The cost of food items and beverages in hotels and restaurants, however, remain unchanged irrespective of the GST or its amendments.

Hoteliers say that their prices depend upon the cost of production including usage of raw materials. As there is no drastic change in price of raw materials, the cost of production remain unchanged. However, the hoteliers say that the customers were benefitted as the tax burden has come down from the earlier 18 per cent to five per cent of GST. For instance, if a customer is supposed to pay bill worth Rs 100, he or she will pay Rs 105 at present when it used to be Rs 118.

The hoteliers say that they prepare menu cards indicating price list of various foods and beverages during the commencement of new fiscal year regularly and the prices will be decided based on cost of production. With new GST regime, the hoteliers were forced to paste stickers twice on prices of food and beverages on menu cards including GST of 18 per cent and GST of five per cent.

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