Most of the hotels in Tamil Nadu and Puducherry remained shut today in protest against high taxes under the proposed Goods and Services Tax (GST) regime.

Around 1.5 lakh restaurants, bakeries and tea stalls remained shut in the state, 80,000 of them in Chennai.

Plea for lower rates R Srinivasan, Secretary, Tamil Nadu Hotels Association, said hoteliers in Tamil Nadu and Puducherry want the GST for restaurants be brought down to 5 per cent bracket for both air-conditioned and non-AC restaurants.

Currently, hotels with turnover less than ₹50 lakh pay 2 per cent tax if it is an AC restaurant and 0.5-0.75 per cent tax in case of a non-AC restaurant. For hotels generating over ₹50 lakh revenue, a tax of 2 per cent is levied for non-AC restaurants. In AC restaurants, right now a service tax of 14 per cent is levied on 40 per cent of total bill.

Srinivasan said under the current tax scheme, most non-AC hotels do not levy tax on consumers since the tax is less than 1 per cent. “But GST will change everything,” he added. After implementation of GST, non-AC hotels under ₹50 lakh turnover will come under the 5 per cent tax bracket whereas the rest will have to pay 12 and 18 per cent tax for non-AC and AC restaurants respectively.

Meals to cost more Srinivasan said that with the new tax, dining out will be even more expensive as the tax is levied on the whole amount rather than the portion of the bill. “We are going to lose consumers,” he said.

Srinvasan said similar protests are happening in neighbouring states of Kerala, Karnataka, Andhra Pradesh and Telangana. The associations in the respective states will take up the matter with the GST Council when it meets on June 3. Protests will continue if the recommendations are not considered, he added.

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