MUMBAI: This Friday, the party may not go beyond midnight as most restaurants plan to down shutters early in order to prepare for the switchover to the goods and services tax (GST) regime from Saturday. Restaurants, which otherwise close at 1.30am, especially on Friday as it is a good business day, will either shut around 11.30pm or take orders only till midnight.
“There is a technical glitch. Systems will have to be rebooted for GST software to be effected, and this can happen when we open for business at 12 noon on Saturday. So orders placed after midnight cannot be loaded with GST,” said a manager of the sea-food-focused Oceanic restaurant in Chembur.
Oceanic, like most other joints in the city, has been gearing up for the July 1 GST rollout. Though they have upgraded their software to automatically calculate GST on food receipts after June 30, they do not want to take risks.
Mumbai ranks among India’s top cities in terms of eating out, according to a 2016 survey by National Restaurants Association of India.
The survey also highlighted that Mumbaikars prefer to spend more money at restaurants, be it standalone or inside hotels.
“We want to avoid confusion and arguments. If a customer places order before midnight, it will be billed as per existing rules, and if the same customer makes an additional request after midnight, it will fall under GST. This will make a tricky situation,” said Vishwapal Shetty, owner of Sea Lord in Worli.
Adding to the confusion will be the fact that GST is set to make eating out costlier. This is because sourcing costs of processed meats, imported condiments and other packaged cooking ingredients will go up following GST, and restaurateurs intend to pass on the increased costs to customers over the next few months.
“We will not immediately revise rates as it will take some time for us to understand how much GST is applicable to various food items. Eventually, customers will have to pay as our procuring costs will rise,” said Hemant Oberoi, former Taj chef-turned-founder of the eponymous restaurant.
Like Oberoi, most restaurateurs plan to follow a wait-and-watch policy for a couple of months on the impact of GST on cost of operations and then change fares.
“We can’t change the menu just for taxation purposes. In any case, we change the menu every six months; the changes will reflect in the next one,” said the founder of a fine-dining restaurant.
AC joints with bar licences will charge GST of 18%, while non-AC eateries with annual turnover of Rs50 lakh will levy GST of 12%. GST is not applicable to liquor, so restaurants will give two separate bills, one for food which will include GST and the other for alcoholic beverages which will include VAT and other taxes.
“GST will make the bill look heavy as taxes are hidden now. People don’t get tax loaded on their bills as restaurants with a turnover of Rs 3 crore have been giving a composite tax of 5%,” said Adarsh Shetty, president of Ahar, an association of 8,000 bars and restaurants.
“To adjust the new tax, we will have to remove existing taxes and then load GST to ensure patrons don’t face much hike. The net increase on the bill could be around 7%,” said Ashwin Shetty of Cafe Vrundavan in Sion.
