Steeper service taxes and food prices make dining out a luxury

Eating out and partying seem to have become a luxury as higher food prices, increased taxes as well as a falling rupee erode the purchasing power of the middle class.

Eating out and partying seem to have become a luxury as higher food prices, increased taxes as well as a falling rupee erode the purchasing power of the middle class.

Retail prices of almost all foodstuff and everyday goods and services are up.

To make matters worse, the rupee has hit a two-year low, crossing Rs 65.50 to a dollar on Thursday, which means that an extra drink of an imported liquor at your favourite restaurant or an exotic fruit platter will make you feel the pinch more.

“I used to go out for a meal with my friends a few times a month earlier, but due to the high service taxes the frequency has reduced to once a month,” said Rashi Sinha, a 24-year-old MNC employee in New Delhi.

“We are paying half the bill amount as service tax. The prices of everything is going up and this is the only place where we can cut down.”

The government increased service tax rates from 12.36% to 14%, which came into effect from June 1.

This came as a jolt to many, especially youngsters who say they now eat at home more often or have had to cut down on their visits to their favourite restaurant.

Manav Sinha, a lawyer, said making eating out so expensive was making the government unpopular among the urban middle class.“A few bucks extra does not pinch the upper class and the poor have nothing to do with these taxes. It is people like us who are affected,” Sinha said.

“I still remember that I had to pay 20% extra for ordering a lemon soda because it came under the ‘aerated drinks’ category. One shot of soda and suddenly the bill shoots up,” he added.

Many eateries also take advantage of a grey area called service charge, which is not a government tax but a levy that restaurants are free to charge according to their will.

There are no official guidelines on service charges.

“(Given) Delhi’s extreme weather, going out to an air-conditioned restaurant is the only plausible option we have,” said Madhuri Rawat, a teacher at a private school. “Now that the government has curbed that too we have no other entertainment avenues.”