Consumers feel restaurants are not passing benefits of GST rate cuts: Survey

Eating out hasn`t become any cheaper despite a big cut in Goods and Service Tax (GST) rates on restaurant bills more than a year ago, consumers feel.

Little over a fourth of the consumers feel that they are yet to receive the benefit even as the GST Council in November 2017 slashed tax rate on restaurants to 5 percent (minus the option of availing input tax credit) from 18 percent (with the chance of availing the benefit of input tax credit), a survey said.

According to a survey conducted by LocalCircles, white goods and fast moving consumer goods (FMCG) have shown an improvement in trend in rate reduction benefit being passed, while the trend for restaurants passing these benefits are not encouraging.

There have been five rounds of rate cuts and rationalisation exercise since the rollout of GST from July 1, 2017. Out of this, major rate cuts were implemented in November, 2017, July, 2018, with the last one effective January 1, 2019.

In order to ensure that the benefit of GST rate cut is passed on to the consumer, the Council had approved setting up of a quasi-judicial body National Anti-Profiteering Authority (NAA). However, NAA can only begin investigation based on complaints received.

The survey shows that 51 percent respondents feel restaurants are not passing on the benefit of the GST rate cut on restaurants, as on January, 2019, up from 45 percent in October, 2018.

Only 29 percent of them feel that they have received the benefit of lower tax and number has been constant during polls in October as well as January, signaling there has no change in consumer experience despite the rate cut.

In case of FMCG items such as shampoo, grocery, among others, 44 percent of the consumers say that products have not become cheaper, as of January, 2019. However, there has been an improvement in this trend as during June, and October, 2018, 61 percent and 49 percent buyers felt that these items have not become cheap post rate cut in November, 2017.

Similarly, in case of white goods such as home appliances, televisions, among others, 47 percent respondents in October, 2018 felt that they have not received the benefit of the rate cut in July 2018. The number, however, fell to 38 percent in January.

Over 60,000 consumers across India are connected through India’s anti-profiteering community founded by NAA and hosted on LocalCircles. To gauge the consumer pulse on how GST rate reductions are reaching consumers, LocalCircles conducted a three-point poll. Over 23,000 votes from 15,000 consumers was received from across the country.