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Monday, Aug 26, 2019

GST to make eating out, buying gold, real estate costlier in Mumbai

Mumbai city news: While air-conditioned hotels will charge 18% GST, non-AC ones will charge 12 %.

mumbai Updated: Jul 06, 2017 09:58 IST
Naresh Kamath
Naresh Kamath
Hindustan Times

Eating out, buying gold jewellery and real estate are set to become costlier in Mumbai, once the goods and services tax (GST) will come into force on Saturday.

While air-conditioned hotels will charge 18% GST, non-AC ones will charge 12 %.

“Consumers will have to pay more once GST comes to force. We are not increasing charges, but GST is a government tax to be collected from consumers. We are just facilitators,” said Adarsh Shetty, president, Indian Hotels and Restaurant Association (AHAR).

So far, most hoteliers paid value added tax (VAT) under a composite scheme, where it was adjusted in the menu and not charged separately from consumers.

Gold jewellery, too, will become costlier with the introduction of GST.

Read more: GST set for red-carpet rollout, finance minister Jaitley appeals to everyone to be part of launch

So far, consumers just paid 1.20% VAT on purchase of yellow metal, which will now be hiked to 3%.

Jewellers used to shell out 1.20% VAT, 0.25% octroi and 1% excise tax. This has now been squared to 3%. “We will charge 3 % GST from consumers. It is indeed a burden,” said Kumar Jain, vice-president, Mumbai Jewellers’ Association.

The real estate sector, which is already reeling under crises, will suffer another blow as the GST is being charged is now 12% which is almost double the tax—VAT (4.5%) and service tax (1%). A 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 raw material suppliers like cement, steel and sand, it is doubtful whether they would pass on to the consumers.

Consumers do not have to pay for readymade flats as GST is applicable for under-construction projects.

“Prices in real estate will increase as there is no guarantee the builder will pass on the benefit to the buyers,” said Prakkash Rohiira, director, Karma Realtors. “Readymade flats are always costlier than under-construction ones and hence this will hardly be any major money-saver,” said Rohiira.

Read more: From automobile to real estate and consumer goods: What will be the impact of GST

First Published: Jun 30, 2017 10:04 IST

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