Subway, Yum restaurants under watch for failing to pass on GST rate cut benefits

Source:     Aug 13, 2018

Quick service restaurant (QSR) chains Subway and Yum Restaurants owned Pizza Hut and Kentucky Fried Chicken (KFC) have come under the scrutiny of the National Anti-Profiteering Authority (NAPA) for not passing on cuts in goods and services tax (GST) rates to consumers. The agency has questioned their practice of passing tax cuts on select products and not across the board, according to an official aware of the development. The GST Council cut rates on restaurants in November 2017 to 5% from 18% in the case of air-conditioned restaurants and 12% in the case of non-air-conditioned ones. Many companies didn’t reduce prices consistently across menu as the GST cut came with a rollback of input tax credit. Restaurant chains say the rollback of input tax credit (ITC) has impacted profitability by 10-18%. Yum runs more than 700 KFC and Pizza Hut restaurants in India, in addition to a small number of Taco Bell stores.