Representational image. Photo: IstockYour eat outs just got pricier. Restaurants across Kerala have increased their menu prices with the introduction of the Goods and Services Tax (GST) on Saturday. Many of the restaurants have started charging patrons 12 or 18 percent of the bill as GST.
Though the GST has prescribed 18 percent tax rate for air-conditioned restaurants, establishments are charging all customers - even those who sit in the non-A/C section - the same rate because they claim that a single establishment could not issue two types of bills.
Ordinary eateries were still catering to their customers at the earlier rates.
'Fine dine'
The GST is particularly harsh on the medium segment. The average air-conditioned hotels have been bracketed along with the 'fine dine' restaurants which are required to pay a luxury tax of 18 percent.
A 'fine dine' restaurant has to meet certain criteria. Not more than 25 seats could be place in 1,000 square feet of restaurant space. An average air-conditioned restaurant in Kerala would easily pack 60-70 chairs in the same place.
The GST categorizes restaurants into three sections, depending on their turnover. Establishments with less than Rs 20 lakh as annual turnover have been left out of the tax net. Restaurants with annual turnover between Rs 20 lakh and Rs 75 lakh will have to pay 5 percent tax. If the annual turnover is more than Rs 75 lakh, air-conditioned restaurants have to pay tax of 18 percent and non-A/C restaurants have to pay 12 percent.
However, the establishments in the lower brackets lose their advantage if they are air-conditioned. They are required to pay 18 percent tax like a premium restaurant.
Read more: Latest on GST rollout | Kamal Haasan says learn from Kerala as he slams TN govt's double taxation move
