GST rate cut: Eating out will get cheaper in Mumbai

Tax will be lower, but rates of items on menu, hiked after introduction of GST in July, won’t be reduced, say hotel owners

With the reduction in goods and services tax (GST) for hotels from 18% to 5%, eating out is likely to get slightly cheaper.

After the GST was introduced in July, hotel owners hiked prices. (HT File)

“The reduction in GST is a huge relief. Hoteliers should absorb the losses incurred on account of withdrawal of ITC (Input Tax Credit),” said Dilip Datwani, president, Hotel & Restaurant Association Western India (HRAWI), a leading association of hotels. “The aim of the government behind the GST cut is to encourage patrons to eat outside.”

After the GST was introduced in July, hotel owners hiked the prices of items on their menus. The customers’ bill included the hiked menu price and the tax. However, though the GST cut may bring down the bill, menu prices will remain unchanged, the Indian Hotels and Restaurant Association (AHAR) said.

“In the past one year, operational costs have increased tremendously, but the menu prices remained constant. If the costs of raw materials and other operations come down, we will consider cutting prices,” said Adarsh Shetty, president, AHAR.

Shetty said the focus of hoteliers is to revive their business, which has fallen by approximately 30% since GST came into effect.

The GST regime was a big blow to low-budget and non-AC restaurants, as they had to pay 12%, while AC and semi-AC ones had to pay 18% GST. This resulted in a massive dip of 80% in home delivery orders, said hoteliers.