In a letter to the Finance Minister, Nirmala Sitharaman, the NRAI called for reforms in the restaurant industry. The representation was addressed to the finance minister keeping an eye on the upcoming interim budget. The letter urged the Government to restore the input tax credit (ITC) to restaurants and increase the GST rate to 12%.
NRAI has proposed the reinstatement of input tax credit for Goods and Service Tax (GST). The association argued that this change will level the playing field for restaurants currently operating at a 5% GST rate without the benefits of input tax credit. The association has also suggested the idea of increasing the GST rate to 12%, to streamline compliance and enhance profitability, particularly for smaller enterprises.
“The lack of ITC not only reduces the operating margin of the business significantly, it also enhances the capital budget for a new project significantly. This increased project cost slows down the expansion plans, which massively impacts the overall growth of the sector,” the letter highlighted.
The letter has also highlighted the need for reinstatement of SEIS Scheme which was discontinued recently. The Association has also demanded the need for a separate Food Services Ministry.
The NRAI also proposed the need for a reduction in GST on eco-friendly packaging materials, advocating for a shift away from higher-taxed materials like plastic.
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