National Restaurant Association of India approaches to government for dual GST structure

Restaurants are now levied a 5% GST, but they can’t claim the input tax credit against the tax they paid on raw materials and other expenses like rent.

The association has suggested a dual GST structure for the industry — 12% for the restaurants that are ready to pay the higher rate but can claim the refund under the GST rule, and 5% for others.
GST rate on restaurants was slashed to 5% from 18% in November 2017. While levying of 18% allowed them to claim input tax credit, under the 5% rate, they can’t do that.

Large chains such as Jubilant FoodWorks, which operates Domino’s Pizza, and McDonald’s master franchise Hardcastle Restaurants have been levied penalty by the National Anti-Profiteering Authority for not passing on GST benefits to consumers.

The restaurant chains have maintained that authorities didn’t take into account the impact of non-availability of the tax credit under the new regime.

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