GST: Abolition of input credit spells trouble for new franchise restaurants

Increase in incidence of non-compliance by various stakeholders is another concern

Amid the fuss on the revision of eatery menus, in line with the new goods and services tax (GST) rate, the restaurant chain sector is staring at another disruption. Abolition of the input tax credit (ITC) facility has raised concern about growth and opening of new franchise outlets.

Last month, the government brought down GST rate for restaurants to five per cent, from 18 per cent. However, removal of ITC has minimised the effective reduction in the tax rate. The debate so far has been on realignment in prices of food and beverages (F&B), the new norms also raise the effective