Uniform fee for Delhi’s eateries; North, East to feel pinch

According to an official order, all eateries in north and east Delhi will now have to pay a health trade licence fee almost on par with the current charges applicable to such establishments in south Delhi.

Eating out is set to get costlier in north and east Delhi, with the unified Municipal Corporation of Delhi (MCD) bringing in a uniform health trade licence fee -- a tax levied on restaurants, hotels, dhabas and banquet halls by the civic body -- from July 1, 2022.

Representational image (Pexels)

According to an official order, all eateries in north and east Delhi will now have to pay a health trade licence fee almost on par with the current charges applicable to such establishments in south Delhi. The rates will be automatically hiked by 15% every three years, as currently done by the New Delhi Municipal Council, the order said.

There was major disparity in the levies being charged by the three municipal corporations -- South Delhi, North Delhi and East Delhi. According to officials, the east and north civic body were charging only a fraction of the fee being levied by their south Delhi counterpart.

For example, five-star hotels in south Delhi were paying ₹65,000 for a health trade licence and the same establishments were being charged ₹500 in north Delhi. The east civic body had a different method to calculate the fee, but rates still came out to be a pittance compared to SDMC areas.

In the three civic bodies, several levies had not been revised or hiked for a decade since elected councillors did not approve proposals pushed by the executive wing, senior civic officials said.

However, during the transition phase, when there are no councillors, the unified MCD has been bringing in several changes to ensure a common administrative regime for the city.

The maximum hike in the annual licence fee is for the five-star hotels, which were earlier required to pay ₹65,500 per annum in south corporation areas and ₹500 per annum in north Delhi areas. They will now uniformly pay ₹5 lakh, the order said.

For three-star hotels, the fee has been increased to ₹1 lakh from the earlier rates of ₹50,000 (south) and ₹500 (north). Barring the rates for such high-end hotels, all others have been brought on par with the south body, an MCD official said.

The east civic body had a “covered area” based system for calculating the health trade licence fee with ₹200 per annum for 0-10 square metre (sqm), ₹500 for 10-20 sqm, and ₹50 per sqm for areas measuring more than 20 sqm.

For example, a dhaba spread over 50 sqm area would pay about ₹2,200 per annum as licensing fee. In comparison, the unified MCD will charge dhabas a licensing fee of ₹6,000 a year, officials said, the same as the rate charged by the now defunct south corporation.

The licensing fee for a north Delhi restaurant with 20 to 50 seats has been raised to ₹20,000 per year from the earlier rate of ₹500, while restaurants with more than 50 seats will have to pay an annual fee ₹25,000, up from the earlier rate of ₹500.

In the case of banquet halls, the annual fee will increase from ₹1,000 a year to ₹15,000 a year for units with less than 250 people capacity and ₹25,000 for those with a capacity to seat more people.

Reasoning away the hikes, an official said the north corporation had not been increased the licensing fee even once in the past decade. “It is impractical to operate on licensing fees that are as low as ₹300-500 a year. The magnitude of hike appears large for north Delhi only because its rates used to be quite low,” the official said, asking not to be named.

Hike unjust: Eatery owners

Nitin Gupta, president of Kamala Nagar Traders association, termed the hikes “unjust”. “We are already paying commercial electricity rates, sales tax, GST and income tax and now more burden is being piled on. How will a small scale trader operate?” he said.

Sandeep Anand Goyle, managing committee member of the National Restaurant Association of India (NRAI), said increase could have been effected in phases. “The food and beverages industry is still recovering from the shock of pandemic lockdown and an immense pressure should not be put on it all of a sudden. We also object to the automatic 15% hike provision,” he said.