GST rate cut: Restaurant body to meet government over pricing

If the consumer has to
benefit on the pricing front, the rate cut will have to be tax efficient to
restaurants: NRAI President
LATEST
NEWS : The National Restaurant
Association of India (NRAI) is likely to make a representation to the
government over the next two days regarding the passing on of benefits of the
lower goods
and services tax (GST) rates to consumers.
NRAI has the country’s top fast-food
chains, among others, as its members.
The government on November 10 had
slashed the GST on AC and non-AC restaurants — excluding five-star hotels — to
5 per cent from the earlier 18 per cent and 12 per cent, respectively.
But the input tax credit, a
facility to set off tax paid on inputs with final tax, was withdrawn with the
November 10 revision, prompting restaurant chains, including McDonald's to
withhold passing the full benefit of the tax cut. Their argument was that the
non-availability of input tax credit pushed up costs by 10-12 per cent,
implying that the 13 per cent GST cut was tax-neutral.
“While we welcome the move by the
government to cut GST, it may have to relook the issue pertaining to input tax
credit,” said NRAI President Riyaaz Amlani.
Amlani is also the chief executive
officer and managing director of Impresario Entertainment and Hospitality,
which runs restaurants such as Smoke House Deli and Social.
“If the consumer has to benefit on
the pricing front, the rate cut will have to be tax efficient (to restaurants).
Currently, it is not,” he added.
Typically, input tax credit is
given on rent, food and other items, and was available to restaurants before
implementation of the GST as well.
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