Similarly, in the restaurant segment too there was a feeling that restaurants were not passing on ITC they availed to customers in the form of lower prices.
Mahesh Jaising, partner, Deloitte India, said: "The government's standpoint was that in the first couple of months, even though all the credit was being granted to restaurants, the base price of a menu was not declining. From the optics of customer, 18 per cent GST also felt high."
In November 2017, the GST council cut rates for both air-conditioned and non air-conditioned restaurants to 5 per cent from 18 and 12 per cent, respectively.
Concluding that removal of ITC would not make much of a difference for customers, Abhishek Jain, partner at EY, said: "In these cases, it's a lesser evil because buyers in these segments, in any case, do not get the credit."
According to him, the decision would have both positive and negative implications as it would increase demand but may not lead to return of cash transactions.
However, the GST council's suggestion to mandate a procurement cap of around 80 per cent of input from registered vendors may thwart untapped cash transactions, according to the analysts and sector players.
The council, while cutting rates on the real estate segment, sought to plug the loophole of having no ITC by making it mandatory for developers to procure 80 per cent inputs from GST-registered suppliers.
"I do hope after a couple of years, when GST settles down with more awareness in all sectors of industry and consumers, there could be a revisit to some of the composition schemes, as it involves credit denial," Mr Jaising from Deloitte India said.
On the possibility of exclusion of ITC from any more items or segments, experts said such a move is unlikely.