Burdened under a 20% tax on payments made to channel distributor, hotels and restaurants screening World Cup say they have no option but to hike food and drinks prices
Burdened under a 20% tax on payments made to channel distributor, hotels and restaurants screening World Cupu00a0 say they have no option but to hike food and drinks prices
Restaurantsand hotels that are screening the Cricket World Cup 2011 now have to shell out extra to the government as the entertainment tax department plans to take away a hefty percentage of the payments they make to the channel distributor. And that means you are likely to be charged more for food and drinks to cover this new cost to the establishment.
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| Spirit dampener: Hotels and restaurants screening the Cricket World Cup say they will have to increase food and drinks prices to cope with the hefty tax. representation pic |
The entertainment tax department is sending notices to establishments stating that the owners will have to give it 20 per cent of the total subscription payments being made to the channel distributor. The notice applies to screenings on regular television sets as well as big screens.
As the extra cost will cut into profits, hotels and restaurants hoping to cash in on the World Cup now see increasing the prices of food and beverages as the only way to keep it profitable.
Sudhir Jena, MD, Oakwood Premier, who is planning to screen the World Cup, said they would be left with no option but to increase prices.
"How else can I make a profit but by increasing the price of food and drinks?" said Jena.
The owner of a North Main Road restaurant who is also screening the World Cup said that as a result of the 20 per cent tax, now they would be deciding on the pricing after taking a look at how much they will spend on taxes.
"Our aim behind screening the World Cup is to earn some extra profit, but if we have to shell out the tax amount by affecting our profits, the customers have to pay for it," said the restaurant owner, who requested anonymity.
Gitanjali Shirke, head of the entertainment tax department, said restaurants and hotels have to pay the 20 per cent tax because they are screening the matches for the entertainment of patrons.
"We will send the notices on Friday or Saturday so that restaurants and hotels are aware that they have to pay the entertainment tax," said Shirke. "Whoever is screening the matches will have to pay the tax."
Ganesh Shetty, president, Pune Restaurants and Hotels Association, said the move to impose the tax had been on for the past six months.
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"We wanted to know under what grounds the department is taxing hotels and restaurants," said Shetty.
The owner of a restaurant in Koregaon Park said the decision of the entertainment tax department was unfair.
"We have contracts with the channel distributor for a year. And the department can tax us for showing matches for one-and-half months. It's not feasible monetarily," said the restaurant owner, who spoke on the condition of anonymity.
Jena of Oakwood Premier said the tax was especially killing for hotels.
"We already have to pay around Rs 2,500 per room because we have direct connection with the channel distributor. Even though they have various brackets which you choose from, that is not of much help. Now, if I have to pay extra for screening the matches, it's going to cost me more and it doesn't make any sense," said Jena.
Some hotels have decided not to screen the World Cup.
"I am not screening the World Cup because I do not want to spend extra. It just doesn't make sense," said Darius Buhariwalla, GM, Hotel Sagar Plaza. "There's lots of money involved and we do not want any issues."
