From July, watching movies and dining out will become more expensive in Karnataka with the roll out of Goods and Services Tax (GST). The bill has been cleared by the Lok Sabha on March 29, and it will adversely impact family outings. 

 

Currently, 4 percent annual mandatory composition tax (COT) is paid by the restaurants, which is not collected from the diners. But, under GST restaurants having an annual turnover of less than ₹50 lakh will have to pay 5 percent COT and a minimum of 12 percent GST which will be passed on to the customers. 

 

The tax component to be paid by the customers at the restaurants will go up to something between 5 percent and 12 percent from zero percent. Also, the tax will depend on the restaurant quality one decides to go, the Times of India quoted the treasurer of Bengaluru Hotels Association, Veerendra N Kamat as saying. 

 

However, due to GST dining at fine dine restaurants and star hotels will become cheaper since effective tax rate on the food consumed at these places will come down. At present, the star hotels levy 14.5 percent value added tax, 5.5 percent service tax, and a 0.5 percent cess. But, under GST there will be one tax, and it does not exceed 18 percent. 

 

Also READ: India to have a GST by July 1, here are the key details

 

Under GST, there are four tax slabs 5 percent, 12 percent, 18 percent and 28 percent and experts are of the view that restaurants with ₹50 lakh annual turnover should fall within 18 percent tax slab. But, if it falls in the 12 percent slab dining in posh places will get cheaper in India.