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.
Rating agency ICRA welcomed the decision to levy 5 per cent GST on all restaurants, both air-conditioned and non-AC, saying the revision in rates is positive and will bring down the dining-out cost. Last week, the GST council lowered the tax rate of restaurants to a uniform 5 per cent from 12 per cent on non-AC restaurants and 18 per cent on air-conditioned ones.
ICRA Vice President and Sector Head Pavethra Ponniah said “This revision in GST rate for restaurants is positive, as it would bring down the dining-out cost, supporting footfalls and revenues at a time when most organized restaurants are struggling to grow demand. As most major inputs for restaurants like grains (not packaged), vegetables, poultry and seafood are exempt from GST, the input credit advantage available for restaurants was negligible. Restaurants were also not passing on any benefit of input tax credit to the consumers under GST.”
Currently, 12 per cent GST on food bill is levied in non-AC restaurants and 18 per cent in air-conditioned ones. All these got input tax credit, a facility to set off tax paid on inputs with final tax.
The council said the restaurants, however, did not pass on the input tax credit (ITC) to customers and so the ITC facility is being withdrawn and a uniform 5 per cent tax is levied on all restaurants without the distinction of AC or non-AC.
Restaurants in starred-hotels that charge Rs 7,500 or more per day room tariff will be levied 18 per cent GST but ITC is allowed for them. Those restaurants in hotels charging less than Rs 7,500 room tariff will charge 5 per cent GST but will not get ITC.
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.
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