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Hotels and Restaurants in India Start a Strike

News Over 10 000 hotels and restaurants throughout India called a one day strike in order to show their disagreement with the new service tax that is to be imposed on all restaurants that have air conditioning system. The strike was so big that many food lovers simply couldn’t find a place to eat! Hotel and restaurant owners were not even scared by the loss – just one day of the strike cost businesses a tremendous sum – RS 2000 crore (approx. US$368 million)!

The strike was organized by FHRAI (the Federation of Hotels and Restaurants Association of India) and HRAWI (Hotels and Restaurants Association, Western India). Thanks to good information support it became possible to make the news about the strike public, and almost 15000 hotel and restaurant members joined the strike.

First this service tax was intended to be imposed on banquets. Then it was spread to air-conditioned restaurants that sell liquor, and, finally, it was decided to impose the tax on all restaurants that have air-conditioning, including partly air-conditioned hotels. Service Tax is not the only tax imposed by the government as there are also the State Taxes. Because of this restaurants in India have almost double taxation and this, certainly, affects the prices, making simple eating out very expensive.

The amount of the service tax is 12.36%. Previously it was imposed only on restaurants with air-conditioning and liquor in their menus (approximately 40% of all the restaurants). The tax applies to restaurants in hotels as well. Currently, many hoteliers in 3-, 4-, and 5-star segments threaten to close down their restaurants. This does not mean that guests will be left in starvation, but hotels are likely to change the way of selling their food. If nothing changes, the majority of hotels are expected to close down their public restaurants and offer food for their room guests only.


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