AHAR assures no hike in hotel food prices

Mumbai: While many feared that with the withdrawal of input tax credit (ITC) benefits, eating in hotels and restaurants will again become expensive, Indian Restaurant and Hotels association (AHAR) has stated there will be no hike in food prices in Mumbai restaurants.

The ITC under GST is the difference in the tax paid while buying raw materials from manufactured and the tax levied while the selling to a consumer. “If we are buying the butter and any other vegetable at 28 per cent tax, the consumer is only supposed to pay 18 per cent tax on the food. And we have to only pay a 10 per cent tax to the government,” said Adarsh Shetty.

Though the government has decided to withdraw the ITC clause from restaurants, AHAR is still happy with the current rate of GST tax which was reduced tax to 5 per cent as it will bring more customers and take away orders are expected to increase. Another benefit that the restaurants will enjoy with reduction of GST is that it has again brought the tax regime in line with the earlier times when GST was not implemented.

Earlier, Mumbai restaurants which are members of AHAR came under a composite scheme, where business with a turnover below Rs 3 crore had to pay 5 per cent tax, and restaurants with turnover above Rs 3 crore were taxed at 8 per cent.