Must lower prices: Govt doesn't buy restaurants' input tax credit alibi

Government officials said that while it is well within the rights of a restaurant to hike prices, doing that on the midnight of the reduction in the GST indicates profiteering intentions.

With most restaurants increasing prices despite a cut in goods and services tax (GST), the government’s calculation reveals that prices would come down despite discontinuation of input tax credit benefit. 

Quashing the argument of restaurants in favour of a price hike, calculation by the government shows the impact of input tax credit would not be more than 6% of the base price for large eateries which have franchises, and much lower at 2% for smaller ones. “It is learnt that a lot of franchise chains have not lowered the price, our calculations show the impact of unavailability of input tax