The National Restaurant Association of India (NRAI) will be meeting the government within the next two days in order to discuss the rate cut in GST. NRAI includes the premier fast-food chains of the country as its members. The main intention behind the meeting would be to discuss the benefits of lower GST rates to the end customers.
Recently, the government had declared that a tax of 5 percent will be charged on both the AC and non-AC restaurants instead of the previous rates of 18 percent and 12 percent respectively. However, the government withdrew the benefit of input tax credit which restricted the restaurants from passing on the end benefit to customers. The food chains are arguing that the non-availability of input tax credit has heightened the costs by 10-12 percent and the 13 percent GST reduction got nullified.
“While we welcome the move by the government to cut GST, it may have to relook the issue pertaining to input tax credit,” said the President of NRAI Riyaaz Amlani. Mr Amlani is the chief executive officer and managing director of Impresario Entertainment and Hospitality, an entity which runs renowned 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 further.
Usually, input tax credit is a benefit which is provided on rent, food, and other related items. The restaurants had this assistance before the implementation of the new indirect tax regime as well.
“We have substantially reduced the prices of some of our flagship products. We have been open about our prices and our menu board prices are inclusive of taxes,” said the spokesperson of McDonald’s India in a statement.
Recently, McDonald’s attracted a lot of contempt from the masses when a customer complained about the eatery on social media pertaining to the fact that they haven’t reduced the process even when the GST rates have decreased substantially.