New Delhi, November 20, 2017: Agreeing to recommendations from various industry participants, the GoI today slashed GST rates for restaurants in various categories. The rates for all restaurants have been slashed to a uniform 5%, as against 12% for all non- AC restaurants and 18% for all AC restaurants. However, there is no input tax credit benefit under the new regime. Restaurants in hotels with tariffs above Rs. 7,500 and outdoor catering will attract 18%, but with input tax credit.
|
Tax slabs |
GST (with input tax credit) |
Revised GST rates from November 2017 |
|
|
Exempt |
» Hotels and lodges with tariff less than Rs. 1,000 per day, in line with existing tax rates |
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|
5% |
» Restaurants under GST composition scheme – applicable where the turnover of restaurants does not exceed Rs. 1 crore |
» Uniform tax rate for AC and Non-AC restaurants, including those at star hotels with tariffs less than Rs. 7,500, but without input tax credit |
|
|
12% |
» Non-AC restaurants and Business class air travel » Hotels with tariffs Rs. 1,000-2,500 |
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|
18% |
» Air conditioned restaurants excluding those in star hotels » Hotels with tariffs Rs. 2,500-5,000 |
» Restaurants in hotels, resorts and lodges with tariffs above Rs. 7,500 (has input tax credit) » Outdoor catering (has input tax credit) |
|
|
28% |
» Hotels, resorts and lodges with tariffs above Rs. 7,500 » Air conditioned restaurants in star hotels |
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Source: ICRA research
According to Ms. Pavethra Ponniah, Vice President and Sector Head, ICRA, “As most major inputs for restaurants like grains (not packaged), vegetables, poultry and seafood are exempt from GST, the input credit advantage available for restaurants was negligible. Restaurants were also not passing on any benefit of input tax credit to the consumers under GST. The 12-28% GST earlier had led to a hike in cost of dining for consumers. This revision in GST rate for restaurants is positive, as it would bring down the dining-out cost, supporting footfalls and revenues at a time when most organized restaurants are struggling to grow demand. “
Corporate Comm India(CCI Newswire)
