Eating Out in Restaurants Gets Cheaper as GST On Food Bills is Slashed From- 18%-To-5%
Eating out will cost you less as the GST Council slashed the levy on all restaurants, other than those in high-end hotels, From 18% percent To 5% percent.
At the same time, it did away with the benefit of input Tax Credit for Restaurants with annual revenue of Rs. 1 Crore or more as they were not passing on the benefit of lower tax incidence to the Consumers. "Since they did not pass on the benefit they are not entitled to the benefit any longer," the finance minister Arun Jaitley said after the meeting.
Restaurants criticised the government's move and said that menu prices will go up by 6% percent as the tax credits had been withdrawn. As a result, a dish that earlier cost, say, Rs. 500 will now cost Rs. 530, if eateries decide to pass on the additional burden to the Consumers.
At the same time, the tax burden will decline from Rs. 90 (18% percent of 500) to Rs. 26.50. As a result, the bill will come down from Rs. 590 to Rs 556.50, a decline of around 5.7% percent; the owner of a leading restaurant chain explained the structure.
"This will make eating out and ordering food at home more affordable for consumers and will lead to a significant growth in the organized restaurant segment," said Hari Bhartia, co-chairman of Jubilant Food works, which runs the Domino's Pizza and Dunkin Donuts Chains in India.