Get hot inside restaurants, thanks to ST
DDT recently asked a foodie friend to file a report on the impact of Service Tax on air-conditioned restaurants. This is the dish he served us -
Restaurateur Janardhanan Nair is unhappy these days. To cater to the burgeoning IT population residing in the posh colonies near the Kinfra Hi-tech Park at Kalamassery, Kochi, he had only recently renovated his pure vegetarian eatery and installed a couple of split-air conditioners. Little did he know that the Hon'ble Finance Minister was closely watching his move.
Prior to 1st April, 2013 air-conditioned or centrally heated restaurants having licence to serve liquor were required to pay Service Tax of 4.92% on the bill amount. Thanks to the Union Budget, 2013 w.e.f 1st April, 2013 all Air conditioned restaurants serving food or beverages are required to pay Service Tax.
Janardhanan found a novel solution to avoid this tax. “I cannot lose clientele by charging a 5% service tax on the bill so I got rid of the air-conditioners and got portable air-coolers" he said, adding that many restaurants in his area have either been considering or have already taken off ACs.
It is learnt that multiplexes have already started collecting Service Tax from cinema goers. An accountant from a city-based multiplex said, "I received a note from our head office informing that service tax is imposed by service tax department and hence I have instructed all the eating joints and ice cream parlours operating within our centrally air conditioned multiplex to collect the same from our customers."Even take-away parcels from food counters are to be billed with service tax of 5%, he said. We cannot shut down the Air-conditioning for we will lose out on our cinema business. Considering our ticket prices, 5% extra on the food price, our customers won't complain. After all, we charge Rs.50/- for a bottle of mineral water, he quipped.
So, be prepared to break into a sweat while eating out at Nair's restaurant for the coolers do not cool you enough.
Last heard was that Nair had some visitors from the department trying to impress upon him that air-cooling and air-conditioning are one and the same!
Now, that would make another story for DDT