Hi,
Recently GST council reduced GST from 18 to 5% in Restaurants. Many people thought that there would be immediate reduction in prices in most of places. It is not happening and govt cant control much.. Here I explain why is this happening
There is something called input tax credit. Now, a restaurant is buying lot of raw material and rent which also come under GST. So when a restaurant buy these raw material or pay Rent, the supplier charge GST from him. For a one lakh rs rent, the GST itself would be 18,000. Now, when customers were paying 18% GST, he is recovering that 18000 from ur GST not giving that to govt.
Now, looking at this Govt played smart and announced reduction of GST to 5% but also removing this set off of rs 18,000. Restaurants being smart just hiked their base prices in return.
Final conclusion:
Don't blame restaurants. It is pure eye wash from government. If someone need to blame of not reducing the Menu price, it is government and not restaurants
Second argument: If you can afford to eat at fancy restaurants, do you really need to care of GST or break up of bill ? If it is too high, just eat at home or road side dhabas or local restaurants.
Recently GST council reduced GST from 18 to 5% in Restaurants. Many people thought that there would be immediate reduction in prices in most of places. It is not happening and govt cant control much.. Here I explain why is this happening
There is something called input tax credit. Now, a restaurant is buying lot of raw material and rent which also come under GST. So when a restaurant buy these raw material or pay Rent, the supplier charge GST from him. For a one lakh rs rent, the GST itself would be 18,000. Now, when customers were paying 18% GST, he is recovering that 18000 from ur GST not giving that to govt.
Now, looking at this Govt played smart and announced reduction of GST to 5% but also removing this set off of rs 18,000. Restaurants being smart just hiked their base prices in return.
Final conclusion:
Don't blame restaurants. It is pure eye wash from government. If someone need to blame of not reducing the Menu price, it is government and not restaurants
Second argument: If you can afford to eat at fancy restaurants, do you really need to care of GST or break up of bill ? If it is too high, just eat at home or road side dhabas or local restaurants.
This is a great article, I have been always to read something with specific tips! I will have to work on the time for scheduling my learning.
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