Eating out at air-conditioned restaurants will become costlier as finance minister P. Chidambaram in Budget 2013 proposed to levy an additional service tax on them.
In last year’s national budget, only air-conditioned restaurants with licenses to serve alcoholic beverages were imposed a service tax of 12.36% applicable on 30% of the bill, which came into effect from 1 April last year.
“In the present budget 2013, the inclusion of all air-conditioned restaurants and cafes more than 2,000 sq. ft to pay service tax will add to the (hospitality sector’s) continued woes. It means that restaurants or a mess, not having the license to serve the alcoholic beverages, but having air conditioner in any part of establishment, at any time during the year are liable to pay service tax. Simply speaking, all the AC restaurants or restaurants with central air heating facilities are liable to service tax w.e.f. 1.4.2013.
In extreme weather conditions in India during summer and winter, it (air-conditioning) is a basic requirement,” said Subhash Goyal, president, Indian Association of Tour Operators and chairman, STIC Travel Group. “Present service tax level exacerbated by high fuel price and swine flu threat will further push down the demand for Indian holidays.”