Ordering food outside is most likely to become affordable. Isn’t that just the best news you’ve heard? Not to say that ordering food or dining out should become an everyday thing, (unless, of course, you’re one of those rentees, bachelors / bachelorettes, PG who rely on takeout meals) but, it is indeed good to know that those occasional times you feel like a meal that is not Ghar ka khana, you may not have to give second thoughts or be hesitant in buying that extra plate of starters( or whatever extra dish it is that you want).
Now, on to the details as to how this change came about:
Well, I think 23rd time is the charm since, at its 23rd meeting in Guwahati, The GST Council decided to reduce the tax 13% less (from 18% to 5%). Although, the eateries will not be able to benefit from the input tax credit.
This new structure imposed on restaurants was a result of when Arun Jaitley, Finance Minister, pointed out that how it was unfair and wrong that restaurants were passing the benefits of ITC on to its customers.
“All members of the GST Council felt that input tax credit (ITC) to restaurants is not passed on customers. Goods and Service Tax (GST) was being charged on existing rates which put an additional tax burden on restaurant goers. Thus, we decided that restaurant industry will not get the benefit of ITC,”
– Arun Jaitley, Finance Minister
Jaitley even stated that since eateries were passing on the ITC benefits, they shouldn’t be allowed to enjoy the perks of the credit either. Hence, the tax rate for all restaurants, AC and non-AC will be only 5%. The 5% tax rate list also includes restaurants in hotels, except for the starred ones where the tariff amounts to Rs.7,500 or more. The tax rate for starred restaurants will be 18% including the benefit of input tax. That also goes for outdoor catering.
While the restaurant sector seems displeased with this fact, the apex industry body nod in agreement, saying that they were trying to look for a way to reduce the GST rate on restaurants to 12% with input tax credit or at 5% 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 rationalize tariffs,” said FHRAI president Garish Oberoi.
Annnnnd we’re just here waiting to do more of: