Hotels, Restaurants should reduce prices of food items after GST, says Hasmukh Adhia

Restaurants across the country complied with the lower goods and services tax (GST) rate of 5% after initial reluctance to do so, at least from some quarters. The new GST rates for a host of items from washing powders and razors to shampoo and watches.

Adarsh Shetty, president, Indian Hotel and Restaurant Association (AHAR) said “Almost all other associations have welcomed the move, arguing that it will not just benefit consumers but also make life simpler for restaurant owners, who do not have to comply with complicated filing requirements. It is very positive for everyone and there is no increase in prices.

Some members of the National Restaurants Association of India (NRAI), which largely represents upmarket chains, have been complaining about the government’s decision to withdraw input tax credit (ITC) and have argued that menu prices may rise by around 6% due to withdrawal of the benefit, which the trade body has said is a key characteristic of GST.

NRAI president Riyaaz Amlani said “Government’s decision was a step in the right direction although a source present in a closed-door meeting of some of the restaurant associations said some of the eateries were suggesting that prices on the ground will not change due to withdrawal of ITC. We are all on the same page and we welcome the decision,” told TOI, adding that the trade body will make a “logical case” for reintroduction of tax credits.”

For organised chains, the major concern is the tax that they pay on rent, which can add up to 20-25% of the annual expenditure. With a credit on 18% tax paid on rent, a part of the gains were available to restaurants by way of lower costs. It’s a different matter that they argued before the government that the overall benefit from ITC was only 1%, which the government believed added up to 6% a figure that now tallies with the calculation being dished out by some of the chains.

Known for bringing the original bakery flavours of France to India, L’Opera, the French patisserie and boulangerie, has recently opened its outlet at PVR Directors Cut Ambiance Mall in Vasant Kunj. With fittings and furniture brought in from overseas, the outlet recreates the atmosphere of France.

Kazem Samandari, the executive chairman of the L’opera chain said “We have been partners with PVR for a long time. So when PVR approached us to open an outlet for the Director's Cut we immediately agreed. The price has been kept a little high at this particular outlet considering the fact that our target audience here is people from the upper class. The lack of easily accessible French bakery products in India is the reason why we are into this business. We have got Paris to India. When people come here to eat and say 'This reminds me exactly of what I had in Paris' makes us happy and proud. What makes L'Opera stand apart from the rest of the bakery outlets is its taste, which I can assure that you won't get anywhere else. We don't use any artificial or colouring material. The price may seem higher when compared to other bakeries but there is no compromise with taste”.

L’Opera outlet can accommodate around 20 people at a time. Even the menu has been especially curated so that there are not just the pastries but sandwiches, baguettes, croissants and some of others.

L’Opera chef Amit said “French bakery products are vast when it comes to variety. So, it was not easy for me to introduce just five new items for this outlet. We initially had decided 10 items and finally came down to five. And all of these will evoke the authentic taste of bakeries available in France”.

L'Opera makes over 26 types of breads every day, some of which include baguettes, croissants, pain paysan (peasant bread), Swiss tress, macarons, quiches, verrines, teas and jams.

L'Opera has opened five outlets this year, including the one in Ambiance Mall and plans to extend to other cities as well.

A number of daily use products ranging from idli/dosa batter to kitchen gas lighter may cost less as the GST Council is considering lowering rates on these items. Tax rates on over two dozen products are being sought to be lowered by the GST Council after anomalies in their fixations were pointed out, official sources said.

To deal with businesses that are deregistering their brands post GST to avoid taxes, the fitment committee has proposed to the GST Council to consider May 15, 2017, as the cut off date for considering as a registered brand for the purpose of levy of GST, irrespective of whether or not the brand is subsequently deregistered. A final decision in this regard would be taken by the GST Council, headed by Finance Minister Arun Jaitley and comprising representatives of all states, at its next meeting on September 9 in Hyderabad. Unbranded food items are exempted from GST, whereas branded and packaged food items attract 5 per cent rate. Hence, many businesses are deregistering their brands to avoid the levy.

Sources said that the GST Fitment Committee has approved new rate structure of over two dozen items and forwarded the proposal to the apex decision making body. The GST Council in the August 5 meeting considered and approved lower rates for some of these items and the remaining will be taken up in the next meet on September 9, they said. Sources, however, could not state the items on which the tax rates have been lowered. They said GST on dried tamarind has been proposed to be lowered to 5 per cent from 12 per cent currently and so will be the case in roasted gram. Custard power would attract 18 per cent GST as against 28 per cent currently while idli/dosa batter would be charged with 12 per cent tax against 18 per cent currently. Oil cakes would be charged with a uniform 5 per cent GST irrespective of end use as against present practice of nil rate on oil cake for animal feed. GST on dhoop batti, dhoop and other similar items has been proposed at 5 per cent, down from 12 per cent at present. This brings dhoop batti at par with agarbattis which attract a 5 per cent tax rate. Plastic raincoast, rubber bands, rice rubber rolls for paddy de-husking, computer monitors and kitchen gas lighters would see GST being lowered from 28 per cent to 18 per cent.

GST on corduroy fabrics is to be lowered to 5 per cent from 12 per cent currently and the same is to be done for saree fall. Tax on textile caps is to be lowered to 12 per cent from 18 per cent and that on idols made of clay to 5 per cent from 28 per cent currently. Brooms and brushes would be tax free as against 5 per cent GST levied currently while rosaries and prayer beads would be charged with 5 per cent tax as compared to 18 per cent now. Hawan samagri would be charged with 5 per cent GST as compared to nil now.