Online food delivery service providers are in hard situations as the decision of withdrawal of input tax credit provision from the restaurants had become an extra burden on both the eatery and service provider.
The decision came in November when the 18 percent GST was withdrawn from the restaurants and a minimum 5 per cent was applied but with a condition. The input tax credit refund was not applicable now with the lowered 5% slab rate.
This particular makeshift had prompted restaurants to charge higher prices on the online platforms while some are asking for an economical commission cut with the online food delivering partners.
There is a difference of approximately 3.5 per cent after the discontinuation of input tax credit availability which the restaurants are trying to settle anywhere in their vicinity.
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A government official stated that “These online food delivery companies have represented for a rate reduction or to allow ITC to restaurants. The matter is being discussed.”
Most of the restaurant’s sales have been hampered after the withdrawal of input tax credit refund and several projects bind for start are in mid-air due to the said provision.
“This has impacted growth plans. We see an impact on the opening of new restaurants due to this” according to the statement given by an expert in the hospitality industry.
The major pain point in the system is non-eligibility of input tax credit refund which in the eyes of the whole industry is a major issue for everyone in the chain.
