Taxmen quiz McDonald's, Starbucks, others for not passing GST cut benefit

Taxmen are surveying restaurants over concerns that they haven't passed on benefits of a GST rate cut to consumers, reported the Economic Times. The daily claims to have accessed a copy of the questionnaires sent out to eateries, including leading names such as McDonald's and Dunkin Donuts about menu prices before and after GST rate cuts on November 15. The survey comes after several consumers complained about the cost of food items being hiked post the GST cut. Brands such as Starbucks and McDonald’s had hiked the base price of some products citing withdrawal of credit for taxes paid on raw material and rent as the reason for ‘price adjustments. 

The GST Council had slashed slabs of 18% and 12% on  A/C and non-A/C restaurants respectively to 5%. The decision was taken on 10th November and was to come into effect from the midnight of 14th November.

Met Senior Officials at Delhi of Finance Ministry & Consumer Ministry requested GOI to ask/take action against Restaurants not passing on benefits of GST reduction of 18% to 5% to Consumers. Submitted proof of MacDonald & Starbucks @BJP4India pic.twitter.com/nFd1vau6Yh

— Kirit Somaiya (@KiritSomaiya) November 16, 2017

A survey conducted LocalCircles showed that eating out hasn't gotten cheaper over the past week, Business Standard reported earlier. Of the 2,000 respondents, 78% agreed that they haven't benefitted from the GST rate cut.

As reported earlier, The National Restaurant Association of India (NRAI) is likely to make a representation to the government today regarding the passing on of benefits of the lower goods and services tax (GST) rates to consumers.

According to a McDonald's bill widely shared on social media, the outlet rigged the price of its regular latte so that the end-price remained unchanged even after the tax cut. However, McDonald's has maintained that they have reduced the prices of their flagship products.

The NRAI has argued that the non-availability of input tax credit has pushed up the operating costs for restaurants, making it impossible for restaurants to offer sweeter prices to customers, as the rate cut is tax-neutral in effect.