The Interim Budget for 2014-15, presented recently by finance minister P Chidambaram, has failed to enthuse restaurateurs, because no call was taken on the service tax levied upon eateries across the country. The tax is applicable to all states at the rate of 12.36 per cent of 40 per cent of the bill, i.e. 4.94 per cent of the bill.
Arvind Shetty, president, Indian Hotel and Restaurant Association (AHAR), said, “Despite a number of representations to the finance minister against the decision to levy service tax (which includes the food and beverages consumed) upon eateries, he has not addressed the same.”
“We urged Chidambaram to mull over the service tax, citing the legal hassles involved. But since he has not been forthcoming, we would attempt to urge him to take a call on the issue when he presents the Budget for 2014-15,” he said, adding that apart from service tax, there was nothing in the Interim Budget for hoteliers and restaurateurs.
Kamlesh Barot, director, Vie Hospitality; past president, Federation of Hotels and Restaurants Associations of India (FHRAI); and immediate past president, Hotel and Restaurant Association - Western India (HRAWI); concurred that service tax had an adverse impact on the sector.
“We have been advocating that it be rolled back, because tourism - both domestic and overseas - has been hit in the last three years, as has the consumption of food and beverages. We, however, have no problem with goods and service tax (GST), which is a national-level indirect tax reform,” he added.
Barot also highlighted the fact that the external credit borrowing (ECB) limit was set at Rs 200 crore. “Not only is the rate of interest on the amount availed from a bank or financial institution to build a hotel or restaurant low, but the period for its repayment is also short,” he added.
He termed the government’s decision to levy excise duty on bars at twice the prevalent rate another eyewash. “Three years ago, it was decided that the rate at which excise duty would be imposed was 10%. We are stunned with the 50% increase in it, and have sought an appointment with the excise secretary, but he hasn’t responded yet,” he said.
Mumbai
Barot threw light on the problems faced by restaurateurs and hoteliers in Maharashtra in general, and Mumbai in particular. “The number of hotels available in the country’s financial capital is certainly a cause for concern. While the taxes levied on them are high, the tariffs are low,” he added.
Entertainment duty
Three years ago, Government of Maharashtra imposed entertainment tax, amounting to Rs 50,000 per month on standalone establishments that have live bands playing or a demarcated area for performances, and Rs 2,50,000 per month for restaurants in five-star hotels.
“As a rate this high is bound to have an adverse impact on restaurants, pubs, discotheques and lounges, we have been pleading with the state government to revise the three-year-old amendment to the Bombay Entertainments Duty Act, 1923, but this too has fallen on deaf ears,” Barot stated.
Source:- fnbnews.com
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