GST rate cut: Restaurant body to meet government over pricing

GST

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But the input tax credit, a facility to set off tax paid on inputs with final tax, was withdrawn with the November 10 revision, prompting restaurant chains, including McDonald's to withhold passing the full benefit of the tax cut.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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