Taxing time for food vendors

With the restaurant business turning out to be among the most affected due to the implementation of GST, hoteliers and those in the food business are coming up with innovative offers and deals to keep the business going. 

While the tax for non-AC restaurants increased from 2% to 12%, those for AC eateries shot up from 8% to 18%. “This has led to eateries all over Tamil Nadu losing 20% of their regular customers,” laments TN Hotels Association State President M Venkadasubbu. 

Even air-conditioned restaurants in busy areas such as Chennai Egmore railway station and surrounding regions remain deserted during peak lunch hour due to the hike in taxes. “Those who patronised AC restaurants earlier now visit non-AC eateries to save money,” adds Chennai Hotels Association President M Ravi. 

Referring to his eatery where he hardly gets any customers in the AC section of the restaurant, Ravi says, “I will have to close down the AC restaurant if there remains no patronage in the longer run.” As a vindication of Ravi’s claims, even the IRCTC food court at the Egmore railway station has converted its first-floor AC restaurant into a non-AC eatery. 

However, the silver lining is that some of the hotels have switched over to various innovative methods to ensure continued patronage. A restaurant in Egmore, which earlier charged Rs 75 for limited meals, has now increased its charges for a meal to Rs 95 (following GST). To ensure that the customer does not feel the pinch and walks away, the restaurant now serves unlimited rice as in addition to supplying bigger pappads and better-quality buttermilk though it may cost little, but provides satis faction to customer who gets charged more now. Incidentally, the meal token has no mention of the additional 20% being charged.

In some non-vegetarian hotels nearby, bills are given on slips of paper without any mention of the rates charged though the mandate is that hotel bills have to specifically mention the central and state GST being charged. While customers visiting AC restaurants have now downgraded to non AC restaurants to offset the GST price hike, the 10% hike in taxes levied for non-AC eateries has resulted in many regulars preferring to eat at the road side stalls where hygiene of the food served is questionable. 

While steamed items like idlis and string hoppers might pass the test as they are steam-cooked in covered containers, dosas and non-veg dishes like Chinese fried rice and noodle varieties being cooked in the open amid dust from surrounding areas may open the door to infection, according to restaurant owners here.  

Karthi, who operates an open-air eatery near the Adyar bus depot, says there is a slight increase in customers since past few weeks. “Though I have not conducted any head count, I now find school and college students patronising us as they like the idlis and dosas we provide.” Senthamarai, an auto driver from Chintadripet, says, “I am used to eating in such pavement stalls regularly as it is a question of affordability and nothing else. 

I have not had health issues till now though I know that the food served in open spaces are not to my liking.” Following the dip in patronage, the hotel owners’ associations have even met Union Finance minister Arun Jaitley to highlight their grievance, but have received no commitment from him. They were further peeved when Union Minister of State for Commerce Nirmala Seetharaman, on being told of their problems, told a private TV channel that people could stay home and eat if they felt that tax rates in hotels were high. “If this is the attitude of the government, we do not know what to do as our very survival is now in question,” Venkedasubbu says. 

State Finance Minister, who interacted with the monthly GST council meet through video conferencing on July 17, revealed, “Various representations received from traders, industries and trade associations regarding realignment of tax rates under GST have been compiled and forwarded to the council for its consideration.” The union finance minister has agreed to consider the request from TN at the 20th meeting of the council slated for the first week of August, he adds. 

And so, hotels, restaurants and various service providers in the food sector are keeping their fingers crossed, hoping for the best at the GST’s August meeting. Until then, it’s probable that more rice and extra sambar will be served on your plates for the GST levied.