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Service tax to make eatingout in AC restaurants costlier
March, 02nd 2013

The foodies in the city should get prepared for shelling out more as city-based hoteliers and restaurateurs are all set to pass on the burden of service tax on customers. The Union budget has proposed to levy a service tax of 12% on all AC restaurants over and above the applicable VAT.

At present, the service tax was levied only on restaurants and hotels serving liquor. However, this new budgetary announcement brings every big and small restaurant having ACs under its ambit.

"This is something bizarre. Are the restaurants now expected to remove ACs, which are no more a luxury but a necessity?," said Tarun Ashok, manager of a restaurant, 17 Degrees, situated at P&M Mall.

Restaurant manager of Raj Rasoi, Bhaskar Raj said, "Profits have already gone down due to inflation in the past few months. Moreover, the entry of new players has affected our business. The extra burden has to be passed on to consumers." He lamented, "The hospitality industry is seen to cater to the rich, which is not always the case. One yardstick cannot be applied to all."

Angeethi's restaurant manager Amarendra Jha felt the hospitality and tourism industry would be badly hit. "We fear 40% of our profits will be hit. Hence, we demand that the tax be rolled back." Experts in hotel industry say the number of middle class people visiting hotels and restaurants would dwindle sharply. These people may now turn to roadside food joints

However, there are a few others who are confident about their customers. "One can't escape the fact that treating taste buds at high-end restaurants is a luxury, which gradually turns into a habit. So no matter how much the price increases, I think my customers won't stop coming if I give them good service," said Ming's Chimney's Rohit Raj.

However, the new announcement has left many customers apprehensive. "Many customers are asking us if we will add any extra service tax. Customers don't seem to know that the restaurants having license of bars already pay that tax and hence we are not going to levy any new tax," said Pind Baluchi's general manager Amar Kumar.

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