The decision was taken during the 23rd meeting of the Goods and Service Tax (GST) Council commenced in Guwahati recently. The tax rate on food bills was reduced from 18 per cent to five per cent.
However, restaurants will not be able to take the benefit of input tax credit (ITC).Liquor will be attracting State levies such as VAT and it is kept outside the GST regime.
The new tax structure for the eateries will be operation from November 1. Recently, Union Finance Minister Arun Jaitley had expressed his displeasure at the restaurants not passing the benefits of input tax credit to the customers.
“All members of the GST Council felt that input tax credit (ITC) to restaurants is not passed on customers. Goods and Service Tax (GST) was being charged on existing rates which put additional tax burden on restaurant goers. Thus, we decided that restaurant industry will not get the benefit of ITC,” Finance Minister Arun Jaitley had said during the council meeting.
“Since they did not pass on the ITC benefit to customers, they will not be eligible for the benefit themselves,” Jaitley had said.
Eateries inside the hotels will also be paying five per cent GST, except in starred hotels where the tariff is Rs 7,500 or more.