To avoid midnight tryst with Goods and Services Tax (GST), which is scheduled to roll out from July 1, the bars and restaurants pan India will shut before midnight on June 30. Restaurants that otherwise close at 1.30 am especially on Friday on account of being a good business day, will either shut around 11.30 p.m or take orders only until midnight.
While the restaurants have been waiting for the GST roll out on July 1 as it will make eating out costlier, some of the restaurant owners reportedly said that they have upgraded their software to automatically calculate GST on food receipts after June 30, as they don't want to take that risk. According to a 2016 survey by National Restaurants Association of India, Mumbai is one of the top cities with the most number of joints to eat out. The survey also highlighted that Mumbaikars prefer to spend more money at restaurants, be it standalone or inside hotels.
“We want to avoid confusion and arguments. If a customer places order before midnight, it will be billed as per existing rules, and if the same customer makes an additional request after midnight, it will fall under GST. This will make a tricky situation,” said Vishwapal Shetty, owner of Sea Lord in Worli, reported to a leading daily.
The ambitious tax move is set to make eating out costlier owing to higher sourcing costs of processed meats, condiments and other packaged cooking ingredients. The restaurants intend to pass on the baton of this increased cost to customers. Most of the restaurants plan to follow a wait-and-watch policy for a couple of months on the impact of GST on cost of operations and then change the rates.
Air conditioned joints with bar license will charge GST of 18 percent, while non-air conditioned eateries with annual turnover of Rs 50 lakh will levy GST of 12 percent. GST is not applicable to liquor, so restaurants will give two separate bills, one for food which will include GST and the other for alcoholic beverages which will include VAT and other taxes.
