Dining out post-GST holds delights, fears

THIRUVANANTHAPURAM: To say that the hotel industry is a perplexed lot would be an understatement. The new GST software is still not up and running, even in high-end hotels. And there is complete darkness regarding ways to claim input tax credit, a facility that could make eating out in mid and high-end hotels dramatically cheaper.  But, as finance minister Dr T M Thomas Isaac had been reminding the state, eating out in lower-end restaurants, with an annual turnover up to Rs 75 lakh, will turn prohibitively costlier. If earlier they were charged just 0.5 per cent, now it is 5 per cent. Uploading bills online will be asking too much of these traditionally run restaurants. “We have been asked to employ accountants and computer experts, something we have never even thought of,” said Janakiraman who runs a small Udipi hotel in Thiruvalla.

As for the bigger hotels, the new tax is 12 per cent (for these with an annual turnover between Rs 75 lakh and Rs 2 crore) and 18 per cent (for those with turnover above Rs 2 crore). For both, it is lower than the existing 19.5 per cent (service and VAT combined). “But our big problem is how to compute the input tax credit,” said G Sudhiesh Kumar of Kerala Hotel and Restaurants Association. “My accountants have attended classes by three sets of experts and they tell me that all the three said three different things,” Mr Kumar said.

If things are done properly, the input tax credit should actually lower eating out costs than what the GST rage suggests. Eating out, except in smaller restaurants, should actually become cheaper. “We don’t know for what all items we can claim input tax credit,” Mr Sudhiesh said.

“Can we claim it for the coffee powder we had purchased, for the advertisements we had put out, for the service charges we pay our accountants, for telephone bills we had incurred, can we also claim it for the uniforms we had stitched for our staff,” he asked. But the industry is sure of one thing: It has to pass on the benefits of a lower tax if it has to claim input tax credit.