Government is open to considering the restaurant industry’s demand of shifting back to higher goods and services tax (GST) along with benefit of tax credit on their inputs, revenue secretary Tarun Bajaj said on Wednesday.
Currently, a 5 per cent tax is levied on restaurant services, irrespective of whether it is air-conditioned or not, without the benefit of the input tax credit (ITC). Also, restaurants in starred-hotels that charge ₹ 7,500 or more per day room tariff will be levied 18 per cent GST but ITC is allowed for them. Those restaurants in hotels charging less than ₹ 7,500 room tariff will charge five per cent GST but will not get ITC.
“I also got this suggestion from the restaurant industry that they would like to go back to a higher rate of taxation with ITC being allowed to them, rather than (be) only on five per cent tax rate. Which is very fine. We would be open to look into this,” Mr Bajaj said at an industry event.
A final decision on the reversal in the tax rate for the restaurant industry will be taken by the GST council, chaired by the union finance minister and attended by state finance ministers.