Eating out at restaurants may get cheaper as GST Council’s decision to lower the tax rate to a uniform 5 per cent from 12 per cent on non-AC restaurants and 18 per cent on air-conditioned ones comes into effect on Wednesday.
Currently, air-conditioned restaurants levy a charge of 18 per cent on food bill and non-AC restaurants levy 12 per cent tax.
But the leading restaurants or eating joints are not passing on the benefit of reduced GST to customers. Here’s an example of McDonalds bill. Before 15-11-2017, the total bill for a regular coffee was Rs.142/- but even after the reduction of GST from 18% to 5%, the bill was then too Rs.142/- thus the customer has no benefit of the reduced GST as the restaurant owners has increased their MRP’s too.
Many restaurant owners have indicated that the move may drive prices up, courtesy withdrawal of input tax credit. Under input tax credit, businesses can claim an offset on the tax paid on inputs against the tax paid to the government. But, now the Council has done away with the tax credit on food items used as raw material.