A Review on Impact of GST in Restaurant Sector

The restaurant sector in India is on constant growth and is now impacted with GST – Goods and service tax. Hence, we thought of giving you a detailed impact analysis about GST on restaurant industry. If we look at the present  statistics of the restaurant industry, as per Indian Food Service Report 2016 it is estimated to be worth 3.09 Lakh Crore. The report also stated that the food market of the country has directly employed more than 5.8 million in 2016

GST EFFECT ON RESTAURANT

The smaller business like food courts, dhabas, coffee bars cater to large segments of population on daily basis. The most people who are in this business category earn modest income and thus the new tax scheme is likely to come under criticism. All types of hotels whether it is AC or non-AC will surely collect the higher rate and this will bring an overall price hike in food items.

Based on the new GST update budget, hotels that are charging Rs 1000 per day for rooms are exempted from taxes. Hotels that are charging Rs 5000 or more room tariff per day will have to pay 28 per cent GST which is a big threat to country’s developing tourism and hospitality. Restaurants in such hotels also, will to pay 28 per cent GST.

In the current tax scheme , restaurant business owners have no option to adjust the output service tax burden with the credit of input VAT on goods consumed, so restaurant owners are encouraging for the GST bill.