Punjab now applies an 8% sales tax rate to certain restaurant payments made through cards, mobile wallets or QR codes, compared with 16% for other payment modes. However, the opinion article included in the document argues that describing this as a 50% relief is misleading because the earlier digital-payment rate was 5%, meaning the digital rate has actually increased.
The article’s principal concern is that the 8% rate is applied without input tax adjustment. It argues that restaurants will bear unrecovered tax on food ingredients, electricity, equipment, rent and services, followed by another tax on gross restaurant receipts. This could create tax cascading and reduce the incentive to purchase from documented suppliers issuing proper tax invoices.
The commentary also identifies unresolved issues involving bank-funded discounts, merchant-funded promotions, cashbacks, reversals and split payments. It recommends a lower and uniform rate with verifiable input adjustment, electronic invoice integration and clearer rules under which banks transmit payment data rather than attempting to determine the legal taxable value of restaurant supplies.