MICE crises hits the Hotel Industry after liquor ban, owing to GST

BY - Franchise India Team
Editor Jul 31, 2017/

/ 4 MIN READ.

MICE crises hits the Hotel Industry after liquor ban, owing to GST

Meetings, Incentives, Conferences & Exhibitions (MICE) segment is the hospitality industry's key revenue source. Hoteliers however are complaining that due to the anomalies created by GST, the hotels have seen a fall in the demand in the segment. This has added to the pain of the liquor ban near highways. Having said that liquor is another major revenue source.

There have been huge cancellations or postponements of pre-booked events on account of an anomaly in GST, that MICE activities held in hotels outside of home state would not be eligible for Input Tax Credit (ITC), said a top official of Hotel & Restaurant Association of India (HRAWI). "There is an overall reduction in MICE bookings in hotels across India as compared to the same period last year, advance bookings are being cancelled and new bookings are not happening," rued HRAWI Preisdent Dilip Datwani.

Coming after the recent liquor ban on highways, GST has acted as a double-whammy to the industry already suffering reduced revenues and Datwani apprehends many establishments may be compelled to scale down operations or shut down, with wide ramifications. In view of MICE Tourism as an important and the fastest-growing segments of the hospitality industry, Datwani urged the government to tackle this particular aspect of GST which has a potential to disrupt growth.

"Businesses may still have digested the high GST but without ITC it just becomes unviable. MICE Tourism is too important a segment for the country to overlook," Datwani pointed out. On the new slabs for the hotel industry, he said the 28 per cent GST for rooms with tariff of Rs 7,500 and above is one of the highest in the world and will seriously restrict cash flows. Besides, the tax percentage will be determined based on the published or declared rate which is creating lot of hardships for the industry.

"We have appealed to the government to remove this condition and determine the tax percentage based on the actual transaction value and review the ITC clause for inter-state accommodations," Datwani said. Former president of HRAWI and Federation of Hotels & Restaurants Associations of India (FHRAI) Kamlesh Barot said in view of the ITC clause, corporates will arrange their MICE in the same state where they are GST-registered or take their businesses abroad with lower tariffs/taxes. "We are in touch with the Tourism Ministry and hope the clause will be altered to encompass MICE for ITC and provide relief to the industry," Barot said optimistically With the late industrialist JRD Tata as one of its original founders in 1950, the 67-year old HRAWI members include all major hotels from budget to deluxe and five-star categories in entire western India.

Investment

Idli, Dosa batter to attract 18% GST

BY - Franchise India Team
Editor Aug 07, 2017 / 1 MIN READ

The classic Bengali sweet sandesh will attract 5 per cent GST. In a set of FAQs on the Goods and Services Tax, the Central Board of Excise and Customs (CBEC) today clarified that Kulfi, idli dosa batter would attract 18 per cent, while wet dates would attract 12 per cent levy.

Clarifying on tax rates on various items, the CBEC said khoya or mawa would attract 5 per cent GST, while dog or cat foods will attract 18 per cent levy.

"Sandesh, whether or not containing chocolate, (will) attract 5 per cent GST," the FAQ said.

Fresh tamarind will attract nil GST, while dry ones will attract 12 per cent rate.

GST impact

Eateries report 20% dip in trade as GST takes hold

BY - Franchise India Team
Editor Jul 31, 2017 / 3 MIN READ

Eateries report 20% dip in trade as GST takes hold

The Goods and Services Tax (GST) has caused a 10-20% dip in customer footfall at eateries in Pune. These include fine-dining restaurants and lounges. Many attribute this to the 12-18% GST on food bills.

Before GST came into effect, many AC/non-AC restaurants had opted for the composite VAT scheme, which meant VAT was being paid by restaurants, while a 6% service tax was being charged to customers. In a course correction bid, many restaurants have slashed menu prices by 5-10% to bring them at par with pre-GST rates. But they still await footfall to normalize. “The biggest factor is the 18% on food as against the 11% tax charged earlier,” said a city-based restaurateur in Aundh. “Customers now feel that eating out has become dearer, and have cut down on this luxury,” said the restaurateur, whose customer inflow dipped from 200 per day to 150 since July 1.

Smaller restaurants in areas like Deccan, Karve road, JM Road and Camp have also been affected, with a 10% drop in customers, said Ganesh Shetty, president, Pune Restaurants and Hoteliers Association (PRAHA). “Before GST, smaller restaurants did not have service tax. They only had the 5% VAT, which was included in the menu prices. After GST, the separate tax of 12% or 18% is putting off customers,” said Shetty. John Chen, owner of Kimling restaurant, said, “We try to explain to the customers that with GST’s implementation, they have no option but to pay the GST regardless of which AC restaurant they visit,” he said. “This is not the case only for smaller restaurants, but also for those in Koregaon Park and Mundhwa,” said, Vikram Shetty, PRAHA vice president.

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