The steep slash in GST on food items from 18% to 5% has buoyed the restaurant sector.
The restaurants that were doing half the normal business, till about week back, have now bounced back and are now doing well owing to the cut in the tax rate.
It is a huge psychological factor for the end customers as they will not have to pay 18% now. Earlier, before GST the tax rate was fixed at 6% VAT and 5 % Sales Tax.
Then it was GST at 18 % and now it has been slashed to 5 % GST, said Mantri Seshagiri Rao, owner of Vihar.
Pre-fixed menu
But there is confusion whether the restaurant owners increased prices when the GST was 18% and now they are now trying to maintain the same price.
“Most of the restaurants in the city have a pre-fixed menu, and whatever is the tax slab, it is added to the customer’s bill. The menu cards clearly state that ‘local taxes’ are charged over and above the card rate. We cannot print menu cards as and when the tax slabs change, so there is less scope to make adjustment in the menu,” said Mr. Seshagiri.
Restaurants are basically classified into two categories: one that come under the regular category and the other the come under the composite scheme (turnover ₹20 lakh to ₹1 crore.)
People who are in the regular category will now have to see whether the GST on purchases exceed the 5% chargeable GST and how much input credit will they get, said Sunil Kumar Panja of Nimantran.
But whatever be the end result, the business has improved post the slashing of the rates, he said.
