sqrrl blog-GST rates 5% on food-header

Cool title, but what’s the news?

When you go out to eat at a restaurant the next time, you’ll have to pay a standard 5% GST instead of the earlier slabs of 12% for Non-AC & 18% for the AC restaurants. This was decided when the GST Council met for the 23rd time, in Guwahati on 12th November 2017. 

? Okay, so what does it mean? 

Finance Minister Arun Jaitley announced in a press conference that the restaurants were unable to pass on the benefits of input tax credit to customers by reducing prices after GST was implemented from July 1. Currently, restaurants get input tax benefits on food, rent and few other items.

The decision seems to be on the basis Government’s that the restaurants have failed to pass the benefit of input tax credits down to the consumers, and hence the decision to bring down the tax rate by 12%. 

? I get it, now tell me why should I care?

Cheaper food! Well, maybe: The decrease in the tax rate should ideally mean that you now have to pay less for food. 

However, that cannot be guaranteed, since restaurants can now choose to increase the prices before taxes to compensate for the difference. Many financial & economic experts have warned to keep an eye out for how the restaurants now price their food to compensate for the lack of the input tax benefits. But more chances that you pay cheaper for you food. So, yay! 

Some places are not cheaper after all: For eg. Places with outdoor catering, & five-star hotels.

These establishments will continue to enjoy the input tax benefits and charge 18% GST. In similar news, it was also announced that out of the 228 items in the 28 per cent tax bracket, 178 have been put into lower tax category of 18 per cent.

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