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India’s finance minister announces AC tax

An AC tax for restaurants in India has been met with opposition from the country’s service industry.

India’s finance minister has announced a 4.91 per cent air-conditioning tax on restaurants that do not serve alcohol. The move follows the introduction of the tax recently for eateries that serve alcohol, on top of a 5 per cent service tax that was introduced last year across the board.

City hoteliers say it’s the small eateries that will be impacted the most, and would push prices by 5 to 8 per cent.

Restaurant owners said that bills would go up by 5 per cent, in direct proportion to the tax levy.

“This year will be more challenging because of high inflation and the service tax levy will add to that. The service tax levied on the total bill is currently between 4 and 5 per cent, which means that the restaurant bill will increase by 5 per cent,” said Praful Chandawarkar, director at a city-based restaurant.

The air-conditioning criteria for tax levy has ensured that hundreds of A/C eateries in the city will have to send out new menu cards for printing.

“Any ordinary restaurant today has an air-conditioner due to the changing weather conditions. This coupled with the rising cost of fuel add to the financial woes of the clients. Small restaurants will suffer. Menu prices at such restaurants will also go up, as some restaurants include the tax in the menu prices,” said Shailendra Kekade, manager of a restaurant- bar lounge.

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