Bhubaneswar, April 3: Eating out has been one of the capital’s favourite activities in the past few years, but the trend is likely to make an about turn soon, say restaurateurs in the city. The reason, they say, is the 2 per cent rise in service tax.

Effective from Sunday, service tax has risen from 10 per cent to 12 per cent.

The 2 per cent rise will have drastic consequences for business, said city-based hoteliers and restaurateurs.

“The rise in the tax will have a great impact on business as customers from the lower-middle class rung will definitely cut down on eating out,” said Subhrojit, food and beverage manager of a hotel in Kharavela Nagar.

“Every time there is an increase in service tax, the hospitality sector suffers right from the first week of April,” he said.

Not only daily customers at restaurants, guests who come to stay at hotels will also have to bear the burden of the rise in service tax.

“I was here for a project and had chosen a comfortable hotel. But I was told that from April, the tax would increase and I would need to pay at least a few hundred more for a week’s stay. So, I had to move to a smaller hotel,” said Saba Khan, a research scholar.

Though the option of eating at smaller food joints will be available to gastronomes, many other services have also become expensive now. Phone calls, beauty services at parlours, travelling and health services also come at a higher price.

Household equipment and appliances will also be costlier adding to a homemaker’s already onerous task of spending within the household budget.

“The rise in the price of fuel last year had already made it difficult to manage the household budget. With the increase in service tax, the task has become decidedly painful. We had planned to get an air-conditioner so that the summer would be easier to bear. But the price they now come at is quite beyond our reach. So, reluctantly, we had to put the plan on hold,” said Anupama Mohapatra, a homemaker.

An increase in indirect taxes such as excise, import and custom duties spells more difficulties for middle-income families to manage the monthly household budget.