Hyderabad: Nearly 40,000 hotels and restaurants will stay closed on Tuesday to protest the higher tax slab prescribed under the new GST regime, which will come into force from July 1. Star hotels will not support the bandh.
About 40 per cent of messes, tiffin centres and other eateries that have an annual turnover of over Rs 20 lakh will observe the bandh. The remaining 60 per cent of establishments that have a turnover of less than Rs 20 lakh and so do not fall under the ambit of GST will continue to function as usual.
Bakeries and sweet shops with an annual turnover of over Rs 20 lakh have also extended support to the bandh.
The GST Council has fixed 12 per cent and 18 per cent tax slabs under GST on hotels and restaurants. The hotels and restaurants industry wants the tax to be a uniform 5 per cent.
South Indian States Hotels Association (SISHA) will participate in the bandh on May 30 while the Federation of Hotels and Restaurants Associa-tion of India has given a call to hold a dharna on June 1 at Jantar Mantar in Delhi. The TS Hotels Association has extended support to the agitation programmes of SISHA.
Hotels sought uniform tax under GST
TS Hotels’ Association president S Venkata Reddy said, “We have submitted repeated representations to the Centre and state government seeking uniform tax rate of 5 per cent in the GST regime. But the GST Council fixed differential tax rates based on turnover. We strongly oppose this as it will adversely affect the hotel and hospitality industry.”
The GST Council had prescribed 5 per cent tax for businesses with a turnover of below Rs 20 lakh per annum, 12 per cent tax for those with a turnover between Rs 20 lakh and Rs 50 lakh and non-AC restaurants and 18 per cent tax for all AC restaurants.
At present, 5 per cent VAT is imposed on hotels with a turnover below Rs 1.50 crore per month and 14.5 per cent for those with a turnover above Rs 1.50 crore. All hotels collect uniform 5.6 per cent service tax.
Mr Reddy said due to lowering of turnover, a majority of hotels in the state will fall in the 12 per cent and 18 per cent tax categories, unlike at present where they fall in the under 5 per cent tax category.