Many popular food chains including Subway, Kentucky Fried Chicken (KFC), Pizza Hut have come under the scrutiny of National Anti-Profiteering Authority (NAPA) for not passing on cuts in goods and services tax rate to the consumers. According to a report published by The Economic Times, it has has been scrutinising that why are they passing tax cuts on selected items and for all the products. Reacting to the development, the spokesperson on behalf of KFC and Pizza said that Yum India holds the highest respect for the law of the land and it adhered to all applicable government rules and regulations.
In November 2017, the GST Council had cut rates on restaurants to 5% from earlier 18% in air-conditioned restaurants and for non-air-conditioned restaurants, it came down to 12%. However several firms did not reduce the prices as according to them it impacted their profitability.
Another spokesperson for Subway said that Subway Systems India Pvt. Ltd is fully cooperating with the national anti-profiteering group in its investigation. A similar probe has been conducted on at Jubilant FoodWorks-operated Domino’s Pizza.
Meanwhile, the restaurant chains have been pushing for entry-level pricing at more than Rs. 30, prices of specific products were reduced. According to the Restaurant chains, the rollback of input tax credit (ITC) has impacted profitability theirs by 10-18%.