Consumers to shell out 24.5 per cent VAT on dinning

The state government is planning to increase the Value-Added Tax, being collected from hotels, restaurants and eateries, by 10 percentage points from April 1.

At present, the state government levies 14.5 per cent VAT on hotels and restaurants. If the hike is approved, people would have to shell out 24.5 per cent VAT for eating out — one of the highest in the country.

Finance minister Etala Rajender on Wednesday convened a meeting on “Revenue Enhancement Plan” on hotels and restaurants with officials of the commercial taxes department to discuss the issue.

Though GST is expected to come into force from July 1 this year, the state government is making moves to hike various taxes ahead of GST with the aim of mopping



up additional revenues for the three months between April and June in the new financial year 2017-18. 

The government feels that if GST implementation is postponed by a few more months after July due to any reasons, it would fetch more additional revenue to the state exchequer. GST was supposed to come into force from April 1 this year but the roll out date was postponed to July.

Officials estimate the move to increase VAT on hotels would fetch about Rs 1,000 crore. In the meeting, it was also discussed to increase taxes on other commercial establishments till GST comes into force. The Telangana State government is aiming to earn an additional Rs 5,000 crore through the fresh increase in taxes.