Govt's plan to slash GST from 18 percent to 12 percent on all AC restaurants might make eating out cheaper

Eating out in air-conditioned restaurants could get cheaper as a GST council panel formed to revisit the goods and services tax (GST) rates on certain items IS likely to bring the down the existant 18 percent rate to a flat 12 per cent on all AC restaurants. While this news could bring delight to those who are regulars at eating out, the govt could lose out on the benefit of input tax credit. 

As per an exclusive report in leading national daily, air-conditioned restaurants currently charge 18 per cent GST and non-air-conditioned ones charge 12 per cent GST. Unifying the rate may mean giving up the ability to claim back taxes paid on inputs. 

"It has been felt that the restaurants have not passed on the benefit of input tax credit to consumers," said a government official, who said the lower rate of 12 per cent may be extended to cover the entire sector. The GST Council had set up a panel to look into the matter. 

The industry lobbied for a 12 per cent rate for all restaurants but with the benefit of input tax credit kept intact. Incidentally, restaurants with an annual turnover of up to Rs 1 crore can avail of the com .. 

Representations were made to the panel about restaurants not passing on the benefit of input tax credit while levying 18 per cent GST, the official said. After the imposition of GST on July 1, taxes on such services rose to 18 per cent from 15 per cent but the rationale was that input tax credit would neutralise the increase.