Hotels report 30 per cent losses per day due to GST

Mumbai: Around 8,000 restaurants in Mumbai allegedly incurred a loss in their profit margins of approximately 30 per cent on a daily basis after an 18 per cent Goods and Services Tax (GST) was enforced from July 1, according to Indian Restaurant and Hotels Association (AHAR). After the Centre’s decision to reduce GST on hotels and restaurants to 5 per cent from November 15, AHAR’s members are expecting a quick revival of their business.

Reacting to a speculation that the Centre’s decision to withdraw input tax credit benefits from November 15 may lead to an increase in prices on the menu, AHAR’s president Adarsh Shetty assured that the prices would not be hiked.  

In a major relief to the hotel and restaurant industry, the GST slab was reduced from 12 and 18 percent to 5 percent following massive criticism by the common man, as eating out became expensive. The AHAR has around 12,000 restaurants as its member in Mumbai and has started a poster campaign thanking the government and informing the patrons that the 5 per cent GST rate will be levied from November 15. Earlier with the 18 per cent GST, around Rs 7 to Rs 8 crore loss was incurred by the restaurants on a daily basis, according to a survey by the association.

Adarsh Shetty, president of AHAR, said, “We are really happy with the GST rates coming down to 5 percent. We have had a tough time for last four months with our profit going down by 30 percent.”

“Nowadays, the AC has become a necessity not a luxury; the government has to understand that. Now even the transport system is using AC then why are only the restaurants discriminated on that basis. We are really happy that the government has brought AC and non-AC restaurants under one umbrella,” Shetty added.