18 percent GST forces hotels to junk biodegradable packaging
For hotels and restaurants, a higher GST on environment-friendly and biodegradable material is the biggest stumbling block to using cutlery made of bagasse (pulpy fiber extracted from sugarcane juice) for serving and parcels. While bagasse attracts 18% GST, plastic despite being banned comes cheaper with only 5% GST. The taxation is in stark constrast to the government’s own policy to encourage biodegradable packaging.
The hotel associations have now demanded that the government reduce the GST on cutlery made of bagasse to make it more affordable to the industry, which is the largest consumer of packaging material, and put an end to the use of plastic and thermocol material as mandated by the government itself. Many hotels and restaurants have complained that the high taxation on eco-friendly bagasse, ongoing pandemic, and rising fuel prices have reduced their profit margins. Moreover, since a sizable profit share is given to food delivery aggregators, buying costly biodegradable cutlery is not a very feasible option for them.
“As a responsible industry association, we understand the damage use of plastic can cause to the environment and support initiatives and the steps that can reduce dependency on plastics in our packaging and cutlery items. But to incentivize or encourage such switchovers, we request the government to reduce the GST on biodegradable items such as bagasse from the current 18% to at least 5%. This can also reduce the final cost the customers have to pay. So, in a way, it is a win-win situation for all stakeholders involved,” said AHAR president Shivanand Shetty.
“We request both the governments to bring the costs of biodegradable materials at par with plastic to encourage its use. Using eco-friendly biodegradable material is not just the national or state-level mandate but a global mission by all leading nations,” he said urging the government to take price-reduction initiatives by cutting the GST on bagasse and other green materials.
