The GST Council slashing tax rates for AC and non-AC restaurants to 5 percent has brought cheer to restaurant owners and customers in the city. Under the previous GST structure, non-AC restaurants charged 12 percent tax and AC restaurants charged 18 percent.
“Reduction of GST rate to 5 per cent for restaurants has come as a pleasant surprise. This is a big boost for the industry reeling under a slowdown. Now irrespective of whether the restaurant is air conditioned or not, consumer will have to pay a uniform GST rate of 5 per cent. This will encourage consumers to eat out again. However, denying the Input Tax Credit (ITC) benefit on the grounds that we have not been passing on benefits is unfair. As of now, none of our vendors have reduced prices and there has not been any reduction of prices in raw materials for us. In fact, post introduction of GST the costs of operations and raw materials have actually gone up. The move to remove ITC amounts to double taxation and is inflationary. It also goes against every tenet of ease of doing business. We wish that the GST Council had considered that rent and interest attract 18% GST. Overall we welcome the developments,” says Dilip Datwani, President, Hotel and Restaurant Association of Western India (HRAWI).
Adarsh Shetty, president of Association of Hotels and Restaurants (AHAR) said, “We are very happy with this decision and thank the GST Council for releasing this burden from the common man. The decision was badly needed as 18 percent for food was too much and people were finding it difficult to pay. It became difficult for us to run our business. Our parcel and home delivery business faced an 80 percent hit because of GST. Now we encourage more hoteliers to work towards compliance.”
Customers also expressed happiness as it means cheaper dining out options. “Eating at air-conditioned restaurants was costing us a bomb. A huge part of the bill was the tax component. Even ordering food home did not make any sense. Now I am happy that it will become affordable again,” said Jenny D’Souza, a Chembur resident.