Bengaluru: For taxpayers in Karnataka the proposed country’s much appreciated Goods and Services Tax seems to bring bad news! The people of Karnataka are likely to pay more when the GST Bill comes into effect on July 1.

Traders and taxpayers across India have hailed GST. But according to reports, in Karnataka, people have to pay more for eating in restaurants and watching movies will be expensive. The reports said, presently restaurants in the state pay a 4 per cent composition tax (COT) that is not being collected from the customers. These restaurants pay the annual COT irrespective of their annual turnover.

Under the new indirect tax regime, restaurants with an annual turnover of upto Rs 50 Lakh will have to pay a 5 percent tax, the lowest tax bracket under “One Nation One Tax” system. The rest of these eateries will pay a GST at a 12 percent rate of standard GST that will be passed on to the consumers as GST is a destination-based taxation.

Veerendra N Kamat, treasurer of Bengaluru Hotels Association, was quoted by a leading daily as saying, “Food at restaurants will see a steep price hike. The tax component for customers will be increased from zero percent to anywhere between 5 percent and 12 percent. The tax for eating at hotels may go upto 18 per cent depending upon the choice of hotel that a customer would make.”

The reports however said that eating at star hotels and fine dine places will cost less.

Government at present has levied a 14.5 percent value added tax, 5.5 percent service tax and a cess of 0.5 percent at star hotels, with customer paying 20.5 per cent total tax for eating at these restaurants. When the GST comes into effect, it will come down to 18 per cent.