12-hour bandh: Hotels, restaurants in South India are protesting GST rates

Several food outlets in South India have closed down and joined the protest against the 12 to 28 per cent GST rate levy on the sector. The Tamil Nadu hotels and restaurants association and the South Indian Hotels and Restaurants Association (SIHRA) had declared a 12-hour bandh for Tuesday to mark their protest against the fixed rates.

Outlets remained closed in Tamil Nadu, Kerala, Andhra Pradesh, Telengana and Karnataka.

While most hotels and restaurants in Chennai remained closed, thereby, adhering to the associations'call for bandh from 6 am to 6 pm, some make-shift food joints continued work as usual.

Outlets reportedly remained closed in Kerala, Andhra Pradesh, Telengana, Puducherry and parts of Karnataka as well. 

"Almost 5 lakh shops including hotels, restuarants, bakeries, large food joints across six states have been shut down from Monday night to Wednesday morning, which would see a loss of around Rs 500 crore," said M Venkada Subbu, president, Tamil Nadu Hotels and Restaurants Association. 

In Tamil Nadu alone, around 2 lakh food outlets were closed causing a loss of around Rs 150 crore.

The associations expect a favourable decision outcome from the upcoming GST meeting, following which they would meet in all six provinces again to take up the protest further.

Stand-alone restaurants and ordinary hotels in South India are going to take a hit in lieu of the proposed GST rates. For instance, standalone restaurants in Kerala and Puducherry do not have a service charge and have to pay a 5% Value Added Tax (VAT) only. Within the new GST regime, these outlets need to pay a 12 per cent tax. 

In Karnataka, small hotel chains like the Udupi Hotel have also been paying VAT so far and the new tax regime is likely to ipmact their business, said sources.

For many of the North Indian states, the 12 per cent tax is a lower rate, considering some of them are already paying around 18 per cent tax.

"Despite numerous representations and memorandums, the government has proposed a levy of 5-18 per cent tax on different categories of restaurants and the highest rate applicable for our industry is rather steep at 28 per cent under the GST along with a room tariff of above Rs 5,000", said the association.

Ordinary and non-star standalone restaurants and eateries cater mostly to the middle and lower class sections who constitute a major percentage of this sector. These industries would also be affected due to the new tax regime, they added.

Meanwhile, the strike called by the Pharma trader's body to shut down pharmaceutical stores to lodge their protest against the online pharmacy business, had a mixed response in Chennai. With a majority of stores remaining open, the call for shutdown seemed to be of no effect. Some stores, however, showed their protest by through black badges even while deciding to keep their shops open.

According to K K Selvan, general secretary, Tamil Nadu Chemists and Druggists Association (TNCDA), however, around 30,000 pharmacy retail outlets would be closed from Monday midnight to Tuesday 6 pm in the region.