meeting of GST Council was held on 10
November, 2017 at Guwahati, Assam
the Ho’ble Finance Minister announced the reduction in GST levied on food bills
at restaurants to 5% while excluding
the Input Tax Credit (ITC) benefit.
Hotels and restaurants have welcomed the decision
which has made the GST rate uniform for all eateries across the country. With
the exception of restaurants in hotels with room tariffs of Rs.7500/- or above
which will continue to levy GST rate of 18 per cent and will continue to
receive ITC. The Hotel and Restaurant Association of Western India (HRAWI)
terming it as a landmark move has extended its support to the decision. The
Association has expressed its appreciation towards the Government for
considering their plea and has thanked the Ho’ble Prime Minister and the Ho’ble
Finance Minister for making eating out affordable again.
Datwani, President, HRAWI said, “Reduction
of GST rate to 5 per cent for all restaurants has come as a pleasant surprise.
This is a big boost for the industry which has been reeling under a slowdown
for quite some time. Now irrespective of whether the restaurant is air
conditioned or not, the consumer will pay a uniform GST rate of 5 per cent.
This will definitely encourage the consumer to eat out again. We are thankful
to the Govt. for considering the industry’s situation and coming out with the
solution that will benefit the customer. HRAWI also clarified that it will not dilute
the Govt.’s efforts of making eating out cheaper by increasing costs. It
unequivocally stated that despite the withdrawal of ITC benefits, it will
request its members not to increase menu prices. We are very clear in our stand
that GST is a landmark tax reform and we should stand with our Govt. at such
crucial times. We will absorb the losses incurred on account of withdrawal of
ITC benefit and hope that the Govt. will reinstate it in future.”
The unavailability of ITC translates to not receiving
tax credit for input costs borne by a business and which increases the
operational cost for businesses.
"Until the Ho'ble FM had made the official announcement, the industry was under the impression that the reduction will be applicable to AC restaurants, effectively making the GST 12%, uniform for both AC and Non- AC. However, the Government went a step further and made a decision in favor of the customer by reducing the rate by 13%. This is undoubtedly a positive and encouraging move. However at the same time by excluding the ITC benefit, restaurateurs will see a rise in their cost of operations. However we will not pass the cost to customers as it would amount to nullifying the Govt.'s effort of making eating out affordable. we have already presented our case to them regarding the need for amending the ITC clause and we feel positive that the Govt. will do justice to business as well," concludes by Mr. Datwani.