In Kerala, GST To Make Budget Hotels Cheaper But Eating Out Costlier

Eating out is likely to be costlier after implementation of GST on account of 12 per cent tax on non-AC restaurants with annual turnaround of more than Rs 50 lakh.

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GST is expected to improve the efficiency of businesses in India.


In Kerala, tourists looking for budget hotels are likely to enjoy the monsoon even more from July 1, 2017, as tariffs will be down after the implementation of GST or goods and services tax.

"We fall into the range of Rs 1,000-Rs 2,500 room rent...which means that we now pay a tax of 19 per cent but with GST coming in, we will pay only 12 per cent. Some rooms are of Rs 3,000-Rs 4,000 range. That will be at 18 per cent after GST. It's still 1per cent less," says Hari Harasudhan, general manager, The Capital. A room in 'The Capital', in Thiruvananthapuram, which now costs Rs 2,142 for a night will be slightly cheaper at Rs 2,016.

But for luxury rooms above Rs 7,500, you'll have to shell out at least Rs 1,500 more for a night after GST is implemented, as there will be a 9 per cent increase in tax, in comparison to the current tax rate of around 19 per cent.

While GST is expected to improve the efficiency of how business is done in India, many hoteliers are nervous about adapting to a new online filing system of returns.

"We've been attending specially organised classes. But even there is no clarity. That's why we have been given time till September to file the July returns. But not many know this," Biju P, in charge of accounts at the Sea Face Hotel by the famous Kovalam beach says.

Meanwhile, eating out is also likely to be costlier. Till now Hotels in Kerala paid just a meagre 0.5 per cent tax for their non AC restaurants but after GST, a Rs 150 burger at the city's popular outdoor cafe 1976 would cost you at least Rs 30 more, because of the 12 per cent GST on non-AC restaurants with annual turnaround of more than Rs 50 lakh.

"We are left with no choice but it's the customer who will have to bear the brunt of this increase. Moreover, GST is more complex, with more paper work", said Vijay Kumar of the Kerala Hotel and Restaurants Association.



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