Not everyone is aware of the Indirect taxes i.e; Service Tax and VAT. We have seen a clear cut breakdown of service tax chargeable at restaurants in our previous article. Now, we are here to provide you some info about VAT (Value Added Tax).

There might be a hike in VAT% in Telangana state. The Telangana State government is planning to increase the Value-Added Tax, being collected from hotels, restaurants, and eateries from April 1. With this dining out will become more expensive.

Telangana 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.

What About GST?

GST was supposed to come into force from April 1 this year but the roll out date was postponed to July. GST is expected to come into effect from July 1 this year, the state government is making moves to hike various taxes ahead of GST with an aim to increase the revenues for the three months between April and June in the new financial year 2017-18.

Proposed VAT %:

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.

Officials estimate the move to increase VAT on hotels would fetch about Rs 1,000 crore. The Ts government is aiming to earn an additional Rs 5,000 crore through the fresh increase in taxes.

The government usually gets a major chunk of VAT revenues from petroleum products, PSUs like Singareni, BHEL, etc., and liquor. Also, 14.5 per cent VAT is collected on electrical and cosmetic goods, star hotels with turnover crossing Rs 5 crore.

What is your take on new proposed VAT %. Do share your views in the comments section below.