Goods and services tax, one of the most subtle tax reforms for the nation which has made doing business a lot easier in India. In the early phase of GST 5 slabs of taxes were made under which taxes would be levied, which are as 0%, 5%, 12%, 18%, and 28% under this system the non- AC restaurants would come under the slab of 12% and AC restaurants will be under the 18% Slab along with the Input Tax Credit (ITC) but the restaurants did not provide consumers the benefits of ITC so the all the AC and non- AC restaurants have been shifted to the 5% GST slab by GST council in the new policy.
In an Interview with the Finance Minister, Mr. Arun Jaitley he told the press that this has been done to make it simple for small and franchise restaurant owners to collect taxes on the products sold he also added that those restaurants in hotels charging less than Rs 7,500 room tariff will charge 5 percent GST but will not get ITC and restaurants in starred-hotels that charge Rs 7,500 or more per day room tariff will be levied 18 per cent GST but input tax credit is allowed for this type of hotels.
The Federation of Hotel and Restaurant Associations of India (FHRAI) said that the GST Council’s decision to cut the tax rate for restaurants to 5 percent without input tax credit will help restaurants across India rationalize tariffs and provide the benefits of GST to the customers. Welcoming the move by the GST council, the apex industry body said it had sought to bring down GST rate on restaurants to 12 percent with input tax credit or at 5 percent without input tax credit. FHRAI president Garish Oberoi said in a statement that they are extremely thankful to the government for making these much-required changes in the GST regime for the restaurants and This is surely going to help restaurants across India cut down prizes and rationalize services.
Rahul Singh, the president of National Restaurant Association of India(NRAI) and the founder and CEO of Beer Cafe told the media that they welcome the reduction in GST slab from very high 18 percent to 5 percent for an AC restaurant without any distinction on their conditioning accounts for a historic decision and the very concept of Input Tax Credit (ITC) is central to GST which will prevent the reduction in collection of Taxes.
Now the question is what is the benefit of it for an Entrepreneur?
My friend, it’s simple as you have to charge fewer taxes so it is not compulsory for you to make your customer pay less to you which in turns helps you to maintain your products price at a legitimate rate and also helps in maintaining the quality. This step of the Indian Government has helped the growth of food retail brands in India because now they can generate more revenue by taking same prices from the customer that they were taking and hence making business more profitable. Burgerim one of the most successful food retail brands of USA is now providing their franchise in India to budding and ambitious Entrepreneurs. To apply for a Burgerim Franchise click here.