GST plays spoil-sport; restaurants to shut shop early on Friday night

 

If you have plans to go out and have a pleasant dinner this Friday, it might not be the best idea to get there late. With the GST being rolled out on July 1st (Saturday), not only is eating out going to become expensive, but restaurants are planning to shut shop earlier on Friday to avoid any GST-related billing confusion. 

 

In a report by the Times of India, restaurants which otherwise shut at 1:30am, especially on Fridays, are planning to shut around 11:30pm or accept orders only until midnight. 

 

The manager of a seafood-focused Oceanic restaurant in Chembur said, “There is a technical glitch. Systems will have to be rebooted for GST software to be effected, and this can happen when we open for business at 12 noon on Saturday. So orders placed after midnight cannot be loaded with GST”

 

Also read: India's tryst with GST begins at midnight on June 30

Like other restaurants, Oceanic is also gearing up for the ‘GST change’. All set with an upgraded software that will help automatically calculate GST on food receipts post July 30, most restaurants don’t want to risk any glitches. 

 

Another restaurateur, Vishwapal Shetty, owner if Sea Lord in Worli, said, "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,"

  

Incidentally, as per a 2016 survey by the National Restaurants Association of India, Mumbai is one of India’s top cities in terms of eating out. It also found that Mumbaikars prefer to spend more at restaurants than any other establishment. 

 

Also read: 'GST enforcement to be lenient initially for genuine mistakes'

Which is why restaurants have the most to lose when it comes to a change in their billing system. 

 

GST is set to make eating out costlier since there will be an increase in the sourcing cost of processed meats, imported condiments and packaged cooking ingredients. This increase will, in turn, be passed on to the customers over the next few months. 

 

Explaining the move, Hemant Oberoi, former Taj chef-turned-founder of the eponymous restaurant said, "We will not immediately revise rates as it will take some time for us to understand how much GST is applicable to various food items. Eventually, customers will have to pay as our procuring costs will rise,"

 

Most restaurants plan to wait and watch for the impact of GST on the cost of production and operations, before they can make any changes. 

 

If you are wondering, exactly how much more you will have to pay for a nice meal at a restaurant, Ashwin Shetty of Cafe Vrundavan in Sion has a take on the subject. He said, "To adjust the new tax, we will have to remove existing taxes and then load GST to ensure patrons don't face much hike. The net increase on the bill could be around 7%,".

 

In general, air-conditioned restaurants with a bar license will charge GST of 18%, and non-air-conditioned restaurants with a turnover of 50 lakhs will levy a GST of 12%. Since, GST is not applicable on liquor, a restaurant will give out two bills, one for food with GST levied and one for liquor with VAT and other taxes levied.  

 

According to Adarsh Shetty, president of Ahar, an association of 8,000 bars and restaurants, "GST will make the bill look heavy as taxes are hidden now. People don't get tax loaded on their bills as restaurants with a turnover of Rs 3 crore have been giving a composite tax of 5%,"

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