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Wednesday, Sep 18, 2019

Goods and Services Tax to make eating out, automobiles costlier, multiplex tickets cheaper in Maharashtra

Mumbai city news: Movie tickets will be cheaper by Rs25 to Rs30 in Mumbai and Pune

mumbai Updated: Jul 01, 2017 10:52 IST
Naresh Kamath and Surendra P Gangan
Naresh Kamath and Surendra P Gangan
Hindustan Times
Eating out, buying houses and cars and purchasing gold jewellery, however, will become costlier.
Eating out, buying houses and cars and purchasing gold jewellery, however, will become costlier. (Photo for representation)

Watching movies at multiplexes will be cheaper when the Goods and Service Tax (GST) comes into effect on Saturday. This is because under the new regime, entertainment duty of 40%-45% in Maharashtra will come down to 28%.

There are several other commodities that will see a slight decrease in prices, but traders said the picture will be clear in the next few days. Eating out, buying houses and cars and purchasing gold jewellery, however, will become costlier.

Movie tickets will be cheaper by Rs25 to Rs30 in Mumbai and Pune.

“At Citypride, Pune, we have reduced rates by Rs30 a ticket as the entertainment duty in Pune has dropped to 28% from 40%. As the existing duty is 45% in Mumbai, the reduction in rates will be little more. However, confusion still prevails at all levels — from theatre owners to distributors and producers. Our association may take some more time to take a final call on this,” said Arvind Chafalkar, former executive committee member of the Multiplex Association of India. Those with a sweet tooth can indulge in ice creams and biscuits as tax on them will be cheaper by 2% to 8%.

The Indian Hotels and Restaurant Association (AHAR) has directed all its members to charge GST from Saturday onwards.

“Consumers will have to pay more when the GST comes to force. We are not increasing any charges, but GST is a government tax to be collected from the consumers and we are just facilitators,” said Adarsh Shetty, president, AHAR.

While patrons in air-conditioned hotels will have to shell out 18% GST, their non-AC counterparts will have to pay just 12 %. Until now, most of the hoteliers paid the Value Added Tax (VAT) under the composite scheme, where it was adjusted in the menu itself and not charged separately from the consumers.

Many hotels and restaurants shut shop early on Friday to switch to the GST system. They upgraded their existing software and took stock of their inventory.

Those buying liquor have been spared as the government has excluded alcohol products from the GST net. Significantly, Maharashtra has some of the highest taxes on liquor in the country.

Gold jewellery will become costlier with the introduction of 3 % GST. Until now, consumers paid just 1.20 % as VAT on their purchase of yellowthe metal. “It is indeed a burden for consumers, but then we need to collect from them,” said Kumar Jain, vice-president, Mumbai Jewellers Association.

The real estate sector, which is already experiencing a slowdown, will see a hike in taxes. GST is being charged at 12 % which is double the current tax — VAT (4.5 %) and Service Tax (1 %). In addition, Stamp Duty of 6 % has added to the burden. The total tax liability will come to 18 %. Although builders may get some rebate in the form of input tax credit while paying suppliers of raw materials such as cement, steel and sand, it is very doubtful whether they would pass on to the consumers. Consumers do not have to pay for ready flats as GST is applicable for under-construction projects. Joe Verghese, managing director, Colliers International India, said prices of both residential and commercial properties will increase. “The biggest impact will the double whammy of RERA and GST at the same time on the residential sector. Both will seriously affect supply and lead to a further increase in prices,” said Verghese.

Buying vehicles, too, will cost more. Consumers will have to pay 2% more for two-wheelers because GST is pegged at 28% from 26%. In case of cars, tax is expected to be in the range of 28%-42% from the current 26%.

Chief minister Devendra Fadnavis described GST as a historic step. “Maharashtra will benefit by its implementation. The trade will be simplified with the new tax regime, which will lead to development,”he said in a statement.

Although there were some doubts in the business community, state finance minister Sudhir Mungantiwar said most of the demands by various traders associations have been agreed upon by the GST Council and concerns raised by the textile industry, too, will be taken up on the appropriate platform.

“We are all set to roll out GST in the state. We met various organisations over the past few weeks and heard their grievances. Eleven suggestions by these representations were agreed upon by the GST council. I am sure traders will face minimum hurdles in the new regime,” he said.

The GST council allowed states to retain powers of taxation on petrol/diesel and to have their own cess/surcharge on luxury cars, tobacco and aerated drinks. Maharashtra has highest tax and surcharge on petrol at Rs 25-26 plus surcharge of Rs11 a litre making it the costliest in the country. Similarly, luxury cars attract up to 42% of the taxes in the state, much higher than other states.

First Published: Jul 01, 2017 09:14 IST