Wounded restaurant industry seeks tax break

In 2020, when the coronavirus pandemic first hit, the government offered collateral-free loans of Rs. 3 lakh crore to MSMEs in general for improving working capital requirements and restaurants.

These loans come with a moratorium period of one year, and can be repaid in four years.

But those running the restaurant say that they have not benefited in any way from this move. Ajit Shah, partner, White Panda Hospitality, said, “Moratorium does not work for us, instead, we need a tax holiday or exemption, in which we are relieved from paying our sales taxes for a year.” Delhi including Kiko Baa and Tera Vita.

The industry has been demanding clarity regarding GST input credit for at least four years. Simply put, when someone buys a good or product for a restaurant For cooking with 100, it pays the government direct GST on that product. This GST amount is between 5-28% on the inputs purchased. Thereafter, the food sold to the customer attracts 2.5% SGST and 2.5% GST. But it does not get any input credit for the goods purchased. Which, industry players said, is a competitive disadvantage as all other industries get it back.

“We are the only industry in India that does not get back the input credit. Last month we had a budget call with the finance minister, but since the restaurant industry doesn’t come under any particular ministry, it loses out,” NRAI chairman Kabir Suri said.

Don Thomas, co-founder of Bengaluru-based VRO Hospitality, which runs Hangover, said the F&B sector has been the worst hit despite the fact that it is the fastest growing and one of the largest employment providers in the country. and Mirage. “The time has come for this sector to come under a dedicated ministry,” he said.

In FY12, quick-service restaurants (QSRs) and cloud kitchens have performed well, but fine-dine restaurants, pubs, bars and clubs have been affected, he said. Restaurants like his have taken a hit on the balance sheet due to major business disruptions due to the issue of GST and other operational issues like curfew and lockdown. “As an industry we need a tax holiday and do not benefit from a moratorium because ultimately we still have to repay the loan,” Thomas said.

Gauri Devidayal, co-founder and director of Food Matters India, which runs restaurants such as The Table and Mag St Bread Company in Mumbai, said it was a capital-intensive industry that required large investments before the business could be up and running. Was. “We are also charged 18-28% GST on most things. We pay excise duty at the beginning of the year. It takes up to a year for a restaurant to open its business and this can become a huge burden. ,” He said.

He said the major question of the industry is whether the government should consider giving restaurants an option to take input credit on GST.

In the restaurant business, licensing is done by each state, with different state excise departments paying for different types of liquor licenses.

When the disastrous second wave hit in April 2021, most restaurants had already paid a hefty license fee for state excise. This fee is collected in advance in March every year. In 2021, most restaurants were closed for practically two months.

In a way, the Delhi government on Monday ordered the closure of restaurants, especially in view of the rise in daily COVID cases of Omron Edition. Others have also imposed strict restrictions, affecting business.

“Business runs on generating cash flow, so when there are these blips like timing or capacity restrictions and hefty license fees, they hit us badly. The government just needs to be a little more liberal to understand that restaurants are not just a bhog but a part of a social fabric and are going to generate massive employment,” Devidayal said.