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VAT reduction has no benefit for those eating out
August, 16th 2013

The Puducherry government may have reduced Value Added Tax (VAT) from 10 per cent to 2 per cent on cooked items but the restaurants are still charging hefty amounts, if consumers are to be believed.

In the first place, the VAT reduction did not come easily. The traders, particularly owners of restaurants and hotels had to resort to struggles, including bandhs for it contending that 10 per cent tax was a huge burden on residents and tourists.But, the consumers are yet to benefit from the tax cut because the leading hotels and restaurants may collect only two per cent VAT now but many of them have substantially increased the rate of food varieties, ranging between seven to 10 per cent, leaving the customers with no benefit at all.

Some restaurant owners, who managed to know the government proposal to cut down VAT well in advance, had hiked the rate of dishes a few weeks before the budget was presented.

On the contrary, many hotels are still collecting old rates in spite of orders passed by the government, say industry insiders.

Consumer forums are of the opinion that the customers were being taken for a ride by the hoteliers who were following unfair trade practices and were critical of the Commercial Taxes Department for failing to monitor the implementation of VAT reduction. “I went to a hotel with my family for dinner expecting that the bill will not be high after the tax cut. To my dismay, the menu card suggested that the rates have gone up from my previous visit,” said M. Murugan, a resident of Saram.

Consumers like him fault the government for failing to impress upon the hotel industry to collect two per cent VAT on old rates.

At least now, it should have convene a meeting of hoteliers to pass the benefit to the consumers, consumers demand.

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