The Federation of Hotel and Restaurant Associations of India (FHRAI) on Friday said GST Council’s decision to cut tax rate for restaurants to 5 per cent without input tax credit will help restaurants across India rationalise tariffs.
Welcoming the move by the council, the apex industry body said it had sought bringing down GST rate on restaurants to 12 per cent with input tax credit or at 5 per cent without input tax credit.
“We are extremely thankful to the government for making these much required changes in the GST regime. This will help restaurants across India rationalise tariffs,” President, FHRAI, Garish Oberoi said in a statement.
The Government today decided to fix the Goods and Services Tax (GST) rate at 5 per cent for all restaurants and not give them input tax credit. It also decided that restaurants in starred-hotels will charge 18 pc tax with input tax credit, those in lower category hotels to charge 5 pc GST without ITC.
Commenting on the development, Deloitte India said in a statement that a uniform tax rate of 12 per cent doing away with tax rate distinction between AC and non AC restaurants is welcome, but the critical issue of input tax credit eligibility cannot be ignored.
EY India said that the GST rate changes announced today is one more positive step in this direction towards streamlining the rates, reducing complexity and increasing compliance.
“We welcome the reduction in GST slab from very high 18 per cent to 5 per cent for an AC restaurant without any distiction on their conditioning. This is certainly historic. The very concept of Input Tax Credit (ITC) is central to GST which is to prevent cascading of taxes,” Vice President, NRAI, Rahul Singh said.
Resonating the same thoughts, Shyam Bhartia, Chairman and Hari Bhartia, Co-Chairman Jubilant Foodworks Ltd., said, “We welcome the move by the Government of India to reduce GST on AC restaurants from 18 per cent to 5 per cent. This is a very progressive step which will make eating out and ordering food at home much more affordable for consumers and will lead to a significant growth in the organized restaurant segment.”
“The new GST rate of 5 per cent is a welcome change in the Industry. This will certainly attract more guests who will now have to pay lesser as compared to the previous 18 per cent GST. Its also great news for International Chains who have been planning to set up base in India but have been sceptical of the high taxation. This will open up newer opportunities for both, Brands as well as consumers who will get a varied choice of restaurants to choose from,” CEO, Mirah Hospitality, Aji Nair concluded.