Hyderabad: After the recent cut in Goods and Service Tax (GST), customers were expecting a drop in food prices in hotels and restaurants in the city. However, hotel bills have not come down as they expected and they are pouring out their anger on social media against the restaurants. Many customers alleged that prices have been increased by restaurants to cope with the removal of the Input Tax Credit (ITC). Angry customers shared pictures of old restaurant bills along with new bills, charged by multinational food joints like Starbucks, Subway and McDonald's.
These fast food joints increased the Maximum Retail Price (MRP) due to which the bill skyrocketed to the level when the GST was pegged at 18 per cent. Amogh Chaphalker, an angry customer, tweeted to McDonald’s, “Shame on you McDonald’s. Not passing the GST benefit to customers is a crime. PMO India please takes action. Price should reduce. You are raising the prices. It is illogical.”
After many people asked for an explanation, McDonald’s gave a statement on Twitter, “The government has brought down the GST from 18 per cent to 5 per cent, and Input Tax Credit was axed. Due to this, our operating costs went up. However, keeping customer convenience in mind, we have structured the changes in such a manner that the total amount paid by the customer remains the same."
Binu Mohan, a Hyderabad resident, said, “There are strict guidelines that the benefit of the lower tax should be passed on to customers. Then why are restaurants increasing prices when the government has announced amendments in the GST.” Avinash Brahmadevara, a tax consultant, said, “Restaurants are trying to make more money and are trying to cope with the removal of the ITC. They are making additional profits as the customers are used to paying the total bill, inclusive of 18 per cent GST.”