Hail GST! Eateries shun pre-Puja hike

KOLKATA: Dining out may not pinch your pocket this Puja. Most Kolkata restaurants, which usually hike their rates in the lead-up to the festival, have decided to defer their annual price revision this year. With GST having lowered tax on food bill from 20.5% to 18%, encouraging people to spend more while eating out, the economies of scale have made it possible to stick to the prevailing prices, the restaurants say.
The eateries are also reaping the benefits of input credit or tax concession on investments and recurring expenses that was introduced with GST in July.
Around 50% of restaurants in the city effect a price rise in September to offset inflation. The hike varies between 5% and 10%. “But this year, the GST has made it possible to avoid the hike. While our patrons are spending more on food and drink following the GST slide, we are saving around 20% through input credit. So, it makes sense to let our customers enjoy the tax benefit for some more time, especially when we are being able to offset the inflation through the input credit,” said Sudesh Poddar, owner of Song Hai and president of the Hotel and Restaurants’ Association of Eastern India (HRAEI).
Input credit allows restaurants a tax reduction on all expenses, including food material and recurring costs like cutlery, air-conditioning, paper and even printer cartridges. “So far, we received a tax rebate on food material, but now it extends to everything we buy for the restaurant, which is a substantial relief,” added Poddar. Mocambo and Peter Cat on Park Street are among those which have decided against a pre-Puja hike. “We are keen to let our patrons enjoy the GST benefit. Pujas are a time when people love to dine out and they should be allowed to enjoy the tax slide. In any case, people are spending more on food now which helps us,” said owner Nitin Kothari.Oasis, another popular Park Street restaurant, has also decided to keep its prices unchanged. “The input credit has let us offset the inflation to a great extent. Also, lower taxes are making people spend more so we are not losing out,” said owner Pratap Daryanani.
Chilli’s, however, is contemplating a price revision this month, but may lower the cost of some food items, said owner Hrishi Bajoria. The restaurant is also planning to do away with the 10% optional service charge that it now levies. “Prices of vegetables have risen manifold over the last few months, making it very difficult to sustain with the existing rates. We have not revised our prices for the last two-and-half years. But yes, the GST benefit has been a boon for the industry and we are trying our best to allow our customers enjoy it longer. So, the rise will be marginal and we are looking at reducing the prices of some dishes,” said Bajoria.
The input credit benefit, however, is a negligible one, feel restaurateurs. “If you consider the inflation, then it just about sets it off,” Bajoria said. Kothari agreed. “The way inflation is going, this benefit will be negated soon,” he said.
Bar-B-Q and One Step Up on Park Street, too, will be holding on to the same prices till the pujas. “We have decided to wait and watch since the GST has just made eating out more affordable. But since we must consider the inflation-induced price rise, an upward revision is not being ruled out. But we are going to wait till at least the pujas,” said owner Rajiv Kothari.