‘GST has brought down hotel industry business by 20%’
The Goods and Services Tax (GST) has adversely impacted the hotel industry in the first month after it came into effect. In an interview with Hindustan Times, Ganesh Shetty, President of Restaurant and Hoteliers Association, Pune, said business has been down by 20%. Excerpts from the interview:pune Updated: Aug 02, 2017 13:49 IST
How has GST impacted the hotel industry in Pune in the first month?
Since last month, we have observed that people in general are avoiding the hotel industry. We can see the negative impact of GST on our business as it has come down by 20%. This is not only limited to Pune but all hotels in India.
Were you prepared for the GST?
We faced a lot of problems during the first 15 days.After that we upgraded our billing machines and menu cards to make us ready for the new tax regime. Many hoteliers were totally unaware about tax slabs but our association helped them sort out problems.
How did you prepare for the new tax slab?
We had changed our menu card and billing machines.There are very few printer who print menu card so there was a rush in the market to upgrade the menu card. After 15 days, we managed the situation and started purchasing raw material from registered suppliers.
Can you please explain the new GST slab and are you happy with it?
Before GST, there was only 5% service tax but now there is 12% GST on non AC restaurants and 18% on AC restaurants. We are not happy about it because it will burden the consumer’s pocket by a minimum 7% extra charge, which will in turn affect our business.
What are you going to do about it?
Our delegation has already discussed with finance minister Arun Jaitley, state finance minister Sudhir Mungantiwar regarding the slab.They seem to be positive about it. The GST council meet has been planned for August 5 and hence, we are expecting something positive from that meeting.
What are your demands?
See all restaurants serve common food like misal, vada pav, which is considered as food for the common man. So government should rethink the tax slab. Government charges 18% GST for a five star hotel but why should a small restaurant come under the 18% slab.
Some restaurant owners in Pune are giving discounts. Is it a way to lure customers?
No, its not like that.They are offering discounts because they do not have the updated menu card. Hence, they give 5% discount on the menu card amount and charge GST on the bill. Now most of the restaurant owners have updated their menu cards and bill book.
Can you see the effect of GST on your supply chain?
Yes.Our supply chain also got affected because of GST. In the first 15 days, there were a number of problems faced by them. But now all suppliers have registered.
Government said the prices of raw material required for hotel industries will decline soon. What do you think?
Yes, they had announced this. We are ready to wait for 2-3 months. The whole picture about hotel industries will be clear within the next few months.