THIRUVANANTHAPURAM: Finance minister Dr T M Thomas Isaac’s attempts to bring down hotel prices remained inconclusive even after he held two rounds of discussions here on Wednesday with organisations representing hotels and restaurants in the state. The finance minister wanted a five percent reduction in prices in non-AC restaurants and 10 percent reduction in AC restaurants. The stakeholders rejected the demand. They said the prices of raw materials - chicken and other essential commodities like rice and vegetables - had shot up. The next round of discussions will be held on July 6.
“The VAT of 14.5 percent on chicken might have gone but its price has gone up by Rs 50 a kg,” a hotel representative who attended the meeting said. Official figures show that the price of rice had gone up by three percent when compared to last month, that of vegetables between 10 and 150 percent. A day ago the finance minister had brought out a table showing how prices had actually gone down in most of the cases under the new GST regime. The burden of Isaac’s argument was that levies like service tax had ceased to exist under the GST and, better still, hoteliers could also get input tax credit. The hoteliers countered this saying that most hotels had long before stopped charging service tax as the imposition of the tax was sub-judice. “As for input tax credit, the maximum as hotel could secure was 2.5 percent,” the representative said.
Further, the minister was told that under the GST small restaurants with a turnover of less than Rs 75 lakh would suffer. “They have been asked not to pass on the compounding fee to the consumers, which means a small outlet will have to suffer a loss of nearly Rs four lakh annually,” the representative said. The minister was also told that the demand that AC restaurants should bring down cost by 10 percent was unacceptable. “The power cost clamped on AC restaurants is already high and to ask them to suffer more losses was tantamount to asking them to shut down operations,” the representative said.
