Good News- GST Slash makes Eating Out Cheaper

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Do you like to eat in restaurants on every other day? Does GST affect your outside eating habits? Here is a good news for you! The GST rates have slashed up to 5% for food products on both AC and non-AC restaurants. So, all foodies out here have to pay marginally lesser tax over the food served in the restaurants from Wednesday, 15 November 2017.

Prior to this declaration, GST rates for all restaurants were 18% for AC restaurants and 12% for non-AC restaurants. And, the restaurant menus were not having the price including GST, thus, even eating at the affordable places turned to be expensive. The declaration of reduced GST rates is like a cold breeze in hot summers. So, eating outside will not be that costly affair now.

Still, it’s tough to interpret that to what extent GST rates will affect your hotel and restaurant bills. Since the government has withdrawn input tax credit for the restaurants where only 5% GST is applicable. Input tax Credit accounts for 3-4% of the profit of a restaurant, as per evaluation by Federation of Hotels and Restaurants Association of India (FHRAI).

Due to this reason, several experts and the people who have been in the food industry since years claim that food bills may not come down as per the consumer’s expectations. Making things even worse, the restaurants might end up increasing the menu prices to equalize the GST rates. Even industry experts also believe that on menu rates will be raised up to 10%.

But, Rating agency ICRA evaluated that dining out should get 7-13% cheaper for consumers with the recent GST update. According to ICRA, restaurants have to pay input credit on unpackaged grains, poultry, seafood, vegetables etc. which are exempted from GST.

With such uncertainty, it is quite tough to conclude that if the decision will greatly reduce your restaurant bills, in the near future. However, NRAI (National Restaurant Association of India) also believes that Government has taken a step in the right direction by slashing the GST rate from 18% to 5%. So, we can expect that the eating out will get cheaper with the reduced GST rates.
Location: India

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