After so much hassle, GST has finally passed to amend the constitution followed by the concept of ‘one nation, one tax’. GST is one indirect tax for whole nation. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages. GST will replace Central Level Taxes like Excise, Service Tax, Custom Duty and State Taxes like VAT, CST, Octroi & Entry Tax, and Entertainment Tax among others.
It will obviously affect food sector and all the people living in all sections of the society. A great initiative considering it is a single tax now and the business enterprise does not have to file multiple returns and deal with multiple agencies. “GST is a welcome reform brought in by the present government. However, the job is only half done”, says Arun Arora, General Manager, Radisson Blu Paschim Vihar adding though the common name of tax is GST, multiple tax rates has made it complicated.
Though the restaurant owners were really hopeful to get a single tax slab also but unfortunately, on rooms they will have two different tax rates, similarly on a dining bill having food items, bottled water and aerated beverage, there would be three tax rates applicable respectively and if liquor is served that would have yet another levy of VAT and not GST. Configuring the software was a herculean task. Going forward, there will be challenges in taking the input credit as our vendors and suppliers are still confused and struggling to configure their HSN codes. It will be couple of months before everything settles down and we are able to streamline our processes. Hopefully, it will benefit the industry when the unbranded and stand alone banquets stop dealing in no bill cash transactions. Perhaps, GST will put an end to this practice.
Under the GST regime, non air conditioned restaurants will attract 12 per cent tax and air conditioned restaurants and those serving liquors will attract 18 per cent. Anything that is served as a part of restaurant bill will be subject to GST, barring alcohol on which Value Added Tax (VAT) will be levied. "I have a mix opinion, GST as a concept is welcomed because it is consumer friendly and will help people understand tax and clear any ambiguity which was present earlier, and on that front it is great”, says Aji Nair, COO, F&B Division: Mirah Hospitality. The percentage currently given for F&B is not helpful to all restaurants, especially with various models operating.” There are restaurants with a pure vegetarian concept and don't serve alcohol who earlier fell in Composite Tax, also for the delivery model business, the tax is now greater which will also affect the sales overall. Though, the industry is welcoming the move with an opinion that the percentage should be looked into and revised.
The prices of agricultural goods will also increase by the implementation of GST. But the good news is that the products will be able to reach the consumer faster due to state-level taxes such as Octroi and Entry Taxes. It will of course reduce the hassle of transporting goods across state borders and very precious time. The marketing and virtual market growth will be improved as well because GST is favorable for National Agricultural Market on merging all the different taxations on agricultural goods. One Indirect Tax will further optimize the working capital of restaurants and consumers can expect the superior quality of goods and services.