Dining out is expected to become more expensive, because the state government increased the value-added tax (VAT) by two per cent on food items delivered in hotels and restaurants which have annual turnover of more than Rs 1.5 crore.
As the hike in VAT is implemented immediately, all the hotels having three star rating and above and those which have an annual turnover of minimum Rs 1.5 crore will now burden its customers with 14.5 per cent tax instead of 12.5 per cent. There will be no change in the VAT rate of 4% for hotels lesser turnover.
The new rate of tax will be implemented at hotels like Paradise, Ohris, Taj Tristar, Kamat Lingapur, Central Court, Yatri Nivas, Tara Residency and Taj group of five star hotels in a group of others.
In chain of outlets such as KFC and McDonalds, 14.5 per cent will be taxed on food served in the outlets and also on take away food. The government distinguished take away food as direct sale of goods and has been taxing 14.5 per cent on it for few months.
Customers should be aware of some hotels trying to cheat customers by charging more tax in the low category. There are only two rates of tax four per cent and 14.5 per cent and any other rate of tax charged is considered illegal. Hotel owners contradicted the tax hike which they felt would further trouble the industry. (Source: Deccan Chronicle)