There has been no sharp drop in restaurant bills, matching the slashing of GST from 18% to 5%, and hoteliers cite a variety of reasons.
A day after the cut went into effect on Wednesday, restaurant chains in Delhi either retained old prices or passed on a marginal benefit, while in Bengaluru, some retained the food price — increasing the tax savings for patrons — but others reimposed a service charge that had been removed when GST of 18% came into force.
In Hyderabad, a ₹195 tuna sub at the Subway chain was down to ₹189 on Thursday, said an employee.
Prices did not budge at McDonald’s.
“Our prices shown on screen are tax- inclusive. So there is no change in the price,” said a teller at McDonald’s in Hyderabad Central Mall.
At a McDonalds in Mumbai, the post-GST food prices generally remained the same, while the tax component reduced, but the base price of a Regular Latte rose from ₹120 to ₹135.
Rahul Singh, vice-president, National Restaurant Association of India (NRAI), said in Delhi that the Association welcomed the reduction in GST from a very high 18% in an A/C restaurant to 5% without any distinction based on air-conditioning. But withdrawal of input tax credit (ITC) was a sore point.
“The very concept of ITC is central to GST, to prevent cascading of taxes. Denying the ITC benefit goes against the grain of GST and will push up costs by 10% which will be passed on to the customer. So, effectively the consumer pocket will get a marginal benefit and not as it seems,” said Mr. Singh.
Hoping for volumes
Bills at some fine dining restaurants and pubs came down in Bengaluru. Collin Richard Timms, chairman, Pecos Hotels and Pubs, said their food prices were unchanged. “We are absorbing the loss due to abolition of input tax credit for now. We hope the volumes will help us recover the loss,” he said.
However, some other establishments reintroduced a service charge in the range of 5% to 10%, though they maintained that it was not being imposed on the customer.
Most smaller hotels and lesser-known chains in Bengaluru, which did not collect GST as a separate component in the bill, but increased menu prices after its introduction claiming to accommodate GST, did not reduce menu prices. Chandrashekhar Hebbar, chairman, Bengaluru Hoteliers Association, said the price hike in July couldn’t be attributed to GST alone and was adjusted to inflation.
Burger King at Churchgate in Mumbai increased its base price but the customer still got a cut in his bill. Prateek Singh, a regular at Burger King for their Crispy Chicken burger, said the dish cost ₹99 (pre-tax) on Thursday. “Before the reduction in GST I used to pay ₹114 for one with tax. Today I paid ₹104.”