Restaurants, hotels and eateries should cut rates on food items in their menu to reflect the benefit of being able to set off tax paid on inputs under GST, revenue secretary Hasmukh Adhia said on Tuesday.
He also said that GST will be levied on entire sum of food bill, including service charge, in a restaurant, while the value of alcohol or alcohol products consumed will attract VAT.
Previously, a service tax was levied on the bill. But the tax the hotel or restaurant operators paid on inputs could not be set off against the tax on final bill. This facility, called input tax credit (ITC), is available in the Goods and Services Tax (GST) regime.
“Most of the restaurants should revise downward the rate charged on food items in their menu because of ITC, which is now
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