GST on restaurants: Why input credit must continue

Especially for big chains, any curbs on credit could raise their capex/operating cost and lead to a hike in base rates on the menu

In the last council meeting, a Group of Ministers was set up to determine, among other things, whether the goods and services tax (GST) rate on restaurants should be reduced from the existing 18 per cent to 12 per cent. While this is great news for the restaurant business as well as consumers, the catch lies in the treatment of input tax credits available to the restaurants under the new rate structure. 

Some media reports seem to suggest that a 12 per cent GST rate may come with a rider that restaurants cannot claim any input GST credit for any