- November 19, 2019 / 3 min readPresently, restaurants are levied a 5% GST, however, they can’t claim the input tax credit against the tax they paid on raw materials and other expenses such as rent.
Hardcastle Restaurants Pvt Ltd, McDonald's India franchisee, has pulled the government to court over no input tax credit in the Goods and Services Tax (GST) framework for restaurants.
Presently, restaurants are levied a 5% GST, however, they can’t claim the input tax credit against the tax they paid on raw materials and other expenses such as rent.
In November 2017, the GST rate on restaurants was cut to 5% from 18%. The 18% GST allowed these restaurants to claim the input tax credit, under the 5% rate, they can’t do that.
Last week, a Council appearing for Hardcastle, Rohan Shah, filed a writ petition in the Gujarat High Court and notices were issued to the government to file a reply in this regard.
Abhishek Jain, Tax Partner, EY India, said, “A lower rate while optically has fared well with customers, a denial of input tax credit to restaurant businesses has increased their tax costs. These businesses have for long been discussing with the government on an optional higher rate with input tax credit and would now also look forward to the final High Court Ruling on this.”
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