NRAI which represent more than one lakh restaurants said that the government’s proposal to reduce GST rate to 12 percent from 18 percent without input tax credits will make eating out in restaurants more costly.

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.

Source: MoneyControl

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