The National Restaurant Association of India (NRAI), an association
of restaurants that represents more than one lakh restaurants in the
country, said that the government’s proposal to reduce Goods and
Services Tax (GST) rate to 12 percent from 18 percent without input tax
credits will make eating out in restaurants more costly, reports The Economic Times.
At the recent GST Council meeting
on October 6, a five-member panel has been set-up headed by Assam
Finance Minister Himanta Biswa Sarma to examine the prospect of reducing
the GST rate for air-conditioned restaurants to 12 percent from 18
percent. The panel will study whether the restaurants will be allowed to
avail input tax credit if the rates are slashed.
Air-conditioned restaurants pay 18 percent tax on food under the GST regime which was rolled out from July 1, 2017.
The Association said that under the present 18 percent
tax rate, restaurants are allowed to claim input tax credit on processed
food, rent, electricity and transportation but they won’t be able to
claim credits when the tax is slashed to 12 percent, resulting in an
increase in their operational costs by 7-10 percent.
Riyaaz
Amlani, President of the National Restaurant Association of India told
the newspaper they would have to increase the menu prices for customers
as taxes on many inputs have risen - without input tax credit, the
operating cost of running the restaurant will rise.
The industry body
feels that their concerns would be taken into consideration and the
proposal won’t get implemented in its current form.
27 Oct 2017, 09:34 AM