No cut in restaurant bills even after GST slash? McDonald's explains

NEW DELHI: If you have an elephant’s memory or are in the habit of keeping old bills, you may have realised that even after the government slashed GST (goods and services tax) rate on eateries to 5 per cent from 18 per cent , the GST cut may not reflect in your restaurant bill , at least at some restaurants.
After the new GST rate came into effect from Wednesday, some consumers took to social media to complain that despite the rate cut, the total bill amount remains same as before .One such customer was outraged that the fast food restaurant chain McDonald's India was not passing on the ‘benefit’ of the GST cut to customers and took to micro-blogging site Twitter to complain.

The consumer also put up a picture comparing an old bill with a new one, to show that McDonald’s had raised its prices, as can be seen in the tweet.
However, McDonald’s India was quick to respond from its official Twitter handle, saying that despite the cut in GST, operating costs have gone up up due to removal of input tax credit. They further clarified that the change in prices have been affected keeping in mind that the customers pay the same amount as before.



To recap, on November 10, the GST Council decided to slash rates on restaurants to a flat 5 per cent from the previous 12 and 18 per cent for non-AC and AC restaurants respectively. But at the same time, it decided to take away the benefit of input tax credit for restaurants with an annual revenue of Rs 1 crore or more as they were not passing on the benefit of lower tax incidence to consumers. "Since they (restaurants) did not pass on the benefit they are not entitled to the benefit (any longer)," finance minister Arun Jaitley had said.
(Also read: Restaurants fall in line on GST as new rates kick in)
Input tax credit refers to a situation where a manufacturer pays the tax on his output, he/she can deduct the tax previously paid on the input he/she purchased.
Following the government's decision, restaurant bodies had expressed displeasure saying it would add to their burden. "We welcome the reduction in tax rates. But without the benefit of input tax credit (ITC), input costs will remain high and we will have to bear the burden. We request the government to give us ITC benefit like any other business," K Syama Raju, president of South India Hotels and Restaurant Association, had said.
Read this story in Bengali