Since yesterday, photograph of two restaurant bills placed alongside showing an increase in the price of an item after GST rate cut has been doing the rounds on social media.
Both bills are of McDonald’s restaurant in The Hub mall in Goregaon (East) in Mumbai. The food item ordered is the same too – a Regular Latte. The bills show that when the GST rate for AC restaurants was 18% till November 14, the price of the item was Rs 120. But when the rate was reduced to 5% from November 15 onwards, the price of the same item has gone up to Rs 134. The new pricing is such whatever the GST rate, the customer pays the same amount eventually on the food item – Rs 142.
So, is the restaurant chain duping customers and not passing on them the ‘benefit’ of the rate cut? This has turned into a heated debate on social media with many users complaining that despite reduced GST on restaurants, the total bill amount remains same as before.
A McDonald’s spokesperson of West and South India, without wishing to be named, recapped what finance minister Arun Jaitley had said while announcing the revised GST rates: that the government is taking away the benefit of input tax credit for restaurants with an annual revenue of Rs 1 crore or more as they were not passing on the benefit of lower tax incidence to consumers.
“Since we are not getting input tax credit anymore, our operation cost has increased by 10-12%,” the McDonald’s spokesperson told ScoopWhoop News. “But we have changed the prices of some of our items in such a way that the customer continues to pay the same price as before [when the GST was 18%),” he said.
The spokesperson said that the fast-food chain has, however, reduced the prices of some of its iconic items after the revised GST. “For instance, our Big McSpicy Chicken Wrap’s price has come down from Rs 178 to Rs 149. Similarly, price of our Maharaja burger has been slashed from Rs 191 to Rs 149.”
“This is the path we have chosen. Other restaurants may have made structural changes of a different kind,” he said.
McDonald’s also tried to pacify customers on social media when confronted with the same question.
A Twitter user posted a thread explaining what McDonald’s has done.
People, however, continue to be divided.
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