Hyderabad: Around 40,000 hotels and restaurants will remain closed on Tuesday to protest the higher tax slab prescribed under the new GST regime, which will come into force from July 1. However, star hotels are not supporting the bandh.

Messes, tiffin centers and other eateries that have an annual turnover of over Rs20 lakh are participating in the bandh. About 60 percent of establishments that have a turnover of less than Rs20 lakh and so do not fall under the ambit of GST will continue to function as usual.

Bakeries and sweet shops with an annual turnover of over Rs20 lakh have also extended support to the bandh.

The GST Council has fixed 12 percent and 18 percent tax slabs under GST on hotels and restaurants. The hotels and restaurants industry wants the tax to be a uniform 5 percent.

South Indian States Hotels Association (SISHA) are participating in the bandh today while the Federation of Hotels and Restaurants Association of India has given a call to hold a dharna on June 1 at Jantar Mantar in Delhi. The TS Hotels Association has extended support to the agitation programmes of SISHA.

Hotels Seek Uniform Tax Under GST

Telangana State Hotels' Association president S. Venkata Reddy said, “We have submitted repeated representations to the Centre and state government seeking uniform tax rate of 5 percent in the GST regime. But the GST Council fixed differential tax rates based on turnover. We strongly oppose this as it will adversely affect the hotel and hospitality industry.”

The GST Council had prescribed 5 percent tax for businesses with a turnover of below Rs20 lakh per annum, 12 percent tax for those with a turnover between Rs20 lakh and Rs50 lakh and non-AC restaurants and 18 percent tax for all AC restaurants.

At present, 5 percent VAT is imposed on hotels with a turnover below Rs1.50 crore per month and 14.5 percent for those with a turnover above Rs1.50 crore. All hotels collect uniform 5.6 percent service tax.