DON’T COUNT PENNIES WHILE EATING OUT, NOW

Eating out will be cheaper. The next time you dive into a restaurant you will have to pay a uniform GST rate of 5 per cent, instead of 12 per cent or 18 per cent earlier, depending on whether it is an AC or a non-AC eatery. The trade-off is that restaurants won't get the benefit of input tax credit -- a facility to set off tax paid on inputs. Currently, GST is levied at 12 per cent on food at non-AC restaurants, while it is 18 per cent for air-conditioned ones with input tax credit benefit for restaurants. Finance Minister Arun Jaitley was convinced that most restaurants did not pass on the benefit of input tax credit to customers by reducing prices. Experts were quoted by NDTV as saying that it will have to be seen how restaurants price their food after removal of input tax credit benefit. Restaurants currently get input tax benefit on rent, food and other items. "5 per cent rate on restaurants (except those in star hotels) without any input credit might not be the best decision from a tax policy standpoint and breaks the chain (of input tax benefits), which is not desirable. From a consumer standpoint, however, it should lead to some decrease in prices, particularly in case of small restaurants," Pratik Jain of PwC told the TV Channel. "This decision seems to be based on the government's belief that the industry has not passed on the input credit benefit to customers." Jaitley also said restaurants in five-star hotels (room tariff above Rs 7,500) will attract 18 per cent GST with input tax credit benefit. Outdoor catering will also attract 18 per cent GST with input tax credit benefit.