GST: Govt to take action against Restaurants for Hiking Food Price

Restaurants - CBEC - CGST - Taxscan

The Government is likely to take strong action against restaurants hiking food prices despite the sharp cut in GST to 5%.

In the meeting held on 10th November, 2017, the Council had recommended major relief in GST rates on certain goods and services. These recommendations spread across many sectors and across commodities, which subsumes all central and state levies and was introduced on July 1.

GST Council also brought all AC and non-AC restaurants in the 5 per cent GST bracket without the input tax credit (ITC). All members of the GST Council felt that Input Tax Credit (ITC) to restaurants is not passed on customers.

Reportedly, warnings had been given to FMCG companies, tax departments to focus restaurants not passing through the benefit of lower 5% rate and to reduce the hiking prices on food.

The restaurants has increased the price of food items to ensure consumers pay almost the same as before the 5% GST rate came into effect. When the restaurants are not allowed to benefit the ITC, gradually the running would lead to their costs rising by at least 6-7%, which is why they hiked prices in the first place.

Now the government instructed to cut price and ensure that bills are providing at 5% GST.

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