Apex body of hotels and restaurants welcomes GST rate change

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The Federation of Hotel and Restaurant Associations of India (FHRAI) today said GST Council’s decision to cut tax rate for restaurants to 5 percent without input tax credit will help restaurants across India rationalise tariffs.

Welcoming the move by the council, the apex industry body said it had sought bringing down GST rate on restaurants to 12 percent with input tax credit or at 5 percent 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 rationalise tariffs,” FHRAI President Garish Oberoi said in a statement.

The government today decided to fix the Goods and Services Tax (GST) rate at 5 percent for all restaurants and not give them input tax credit. It also decided that restaurants in starred-hotels will charge 18 percent tax with input tax credit, those in lower category hotels to charge 5 percent GST without ITC.

Commenting on the development, Deloitte India said in a statement that a uniform tax rate of 12 percent doing away with tax rate distinction between AC and non AC restaurants is welcome, but the critical issue of input tax credit eligibility cannot be ignored.

EY India said that the GST rate changes announced today is one more positive step in this direction towards streamlining the rates, reducing complexity and increasing compliance.

“We welcome the reduction in GST slab from a very high 18 percent in an A/C restaurant to 5 percent without any distinction of the air-conditioning. This is certainly historic. However, the very concept of ITC is central to GST, which is to prevent cascading of taxes,” NRAI Vice President Rahul Singh said.