GST rates for restaurants has been a hot topic over the last few months.
The government is of the opinion that restaurants have not passed on GST
benefits to customers and have used GST to increase their profits. From the government's perspective they are correct. Restaurants (those who were earlier in
the composite model - 80%+ of the industry I guess) have used GST as a way
to charge customers more and have conveniently blamed the government for it.
The alternate view on this is that most restaurants were waiting for GST before
revising prices (which most restaurants do annually by about 5-10%) and have
simply held off on raising prices because of the GST rollout. Thus in some ways
by not increasing prices, the benefits have been passed on to the customers. In
my opinion the real issue that irked the government was the fact that the
restaurant industry by and large communicated to customers that the price
increase is because of GST and they could do nothing about it.
But the government's reaction to the situation is not something I agree
with. Rolling back input credits is a reactionary populist move and is a big
backward step, especially for this already cash heavy industry. By removing
input credits, the government has shown immaturity and a poor understanding of
the ground realities in the industry. The decision has been made without
assessing the long-term implications. Or maybe the government wants things to
function as before thus allowing a cash economy to thrive. Restaurants won’t
complain, suppliers won’t complain, landlords won’t complain and now the
consumers will also applaud the government that they have lowered costs for
them (though they will actually be paying 5% more now than the pre-GST
era).
The decision creates a bigger problem in my opinion allowing the
industry to once again gravitate towards cash collections and payments.
Restaurants can show lesser sales and pay lower GST, pay off suppliers and
landlords in cash without bills thus lowering costs. Landlords and suppliers
are happy to do this as they don’t need to pay GST or can pay lower GST. This
also lowers their income tax pay-outs as they can show lesser income now. Landlords,
suppliers and restaurateurs can play with cash again like before - Their good
days are back. The government has in some ways just given them a 5% bonus to
play with.
The GST rollout was a great opportunity for the government to push the
fragmented restaurant industry and the supporting eco-system to move away from
cash transactions, become more professional, tax compliant and gravitate
towards digital payments.
To put this in context it is important to understand the key taxation
related issue in the restaurant industry and the supporting eco-system:
Lower Sales Reporting by restaurants (by conveniently siphoning off cash
collections), thus resulting in lower GST and lower income taxes payable to the
government.
There are 4 big motivations for the restaurant industry to siphon off
cash collections from sales:
1) Lower input costs: Suppliers are more than happy to offer products
for cash (with no tax). For small suppliers, cash is a more convenient way of
doing business and they don't need to bother about tax filings. It is also a
way for them to compete better with larger/professional suppliers, who charge
taxes.
2) Rental Payments: The biggest incentive to deal in cash is for
landlords and they are very happy to take a large portion of their rental payments
in cash. Cash payments are also a great way for them to reduce income taxes.
They can also ask the restaurateurs to shell out more rent in lieu of the GST
not charged to them (e.g. 18% GST gain split between the landlord and the
restaurateur).
3) Staff Salaries: If restaurants officially employ more than 10 people,
they need to register for ESI and when the number crosses 20, PF becomes
mandatory. They also need to pay annual statutory bonus, leave wages and double
salary for working on holidays (NFH - National Festivals & Holidays). Both
ESI & PF, involve deductions from employee salaries and all of the above
implies higher costs for the restaurateur. The largely migrant restaurant staff
population does not value long term benefits nor are they keen on going to a
ESI hospital. What matters to them largely is cash in hand. Having cash
available to do this means restaurateurs can pay their staff more and avoid PF/ESI
registration & the related expenses and compliance
requirements.
4) Paying lower GST and income taxes - Direct benefit of reporting lower
sales. I believe this is not a primary motivator for restaurateurs and is
simply an added benefit that comes with the solution to address the above 3
issues.
Issue number 3 above (Staff salaries) is not something GST could have
directly addressed. But GST could have truly helped with issue 1, 2 &
indirectly 4.
Allowing input credits may not altogether solve the problem of lower sales
reporting by restaurants, but would have atleast pushed them to ask for proper
bills from landlords and suppliers in order to avail input credit, thus
addressing issue 1 & 2 above. Rental collections by landlords through
banking channels would have a significant positive impact on GST collections as
well as on income tax collections. Smaller suppliers would also slowly
gravitate towards digital payments and proper tax payments. Because of the
above, the restaurateur’s motivation to siphon off cash would reduce and this
will mean higher GST and income tax collections for the government.
The government should have stayed with the GST framework, kept the GST
rate at 12% for all restaurants (or stayed the course with 18%/12% rates as earlier) and allowed them to avail input credit. This
would have ensured better collections and also helped clean up the supporting
eco-system. Businesses would have been encouraged to move away from cash
payments and gravitate more towards digital payments, deal with vendors who are
professional and pay taxes honestly and also force landlords to show the real
rentals they charge, pay GST & income taxes as per the rules. The GST
regime with input tax credits would have slowly pushed the industry and the
supporting eco-system towards becoming professional and paying taxes honestly. This
would not have been a populist move though, but the long-term benefits would
have been very impactful. As for consumers paying more, the government should
have let market forces play their part. Why is the government trying to
regulate whether a customer should pay Rs. 20.50 or Rs.22.40 for an Idly? Food
is an essential need, eating out is not.
interesting blog. Visit Rooms for rent in Mumbai
ReplyDeleteThanks for sharing those information. Its really helps to know about the GST. Now most of the restaurant software optimised the GST solutions so it will helps to hotels and small restaurants
ReplyDeleteThanks for sharing such useful information. It was definitely an informative read.
ReplyDeleteNext time you are travelling from Hyderabad to Bangalore highway please ensure that you visit NH7 Refuel to get refreshed.
https://www.facebook.com/search/top/?q=nh7%20refuel
We are the chief merchant of Hotel Products.. We offer a wide range for all hotel products under one roof only. We are leading Hotel crockery importers in India.
ReplyDeleteSuch a Nice blog. Thanks for sharing. Please keep sharing. Visit:Restaurant in delhi
ReplyDeleteIt’s a good piece of information you have shared as we have fish and chips Ashford that is ready to serve you delicious food.
ReplyDeleteThanks for the useful post about "GST Changes for the Restaurant industry - Viewpoint " and i am visiting this blog often to read new posts. Is there any subscribe post option?. Admin kindly reply. Get in touch with me by visiting my sites .
ReplyDeleteorder food online marathahalli|home delivery restaurant at indiranagar
https://waywardpizzachild.tumblr.com/
ReplyDeletehttps://fivepillarsofislam484620672.wordpress.com/2018/04/21/islamic-awareness-week/
https://fivepillers.weebly.com/
https://www.behance.net/gallery/64808853/namz
https://www.evernote.com/shard/s635/sh/a49bce3c-492f-47d1-bc8f-40a86b8b617f/470aa17ea327213957b70704448ac449
https://www.liveinternet.ru/users/rahmanraheem/blog#post434033983
https://rahmanraheem.shutterfly.com/forum/2/1
https://rabada.skyrock.com/3312238756-Islamic-Relief-takes-to-the-buses-with-Ramadan-campaign.html
https://www.dailystrength.org/group/muslims-and-islam/discussion/when-is-ramadan-2018-and-what-is-it-all-about-eve
https://waywardpizzachild.tumblr.com/
All Your Problem Solution By lady Astrologer ushadevi ji. He Is The Best Vashikaran lady Astrologer Call For Quick Solution +91 9982911232
ReplyDeleteOnline Love Problem solution
Love and intercast marriage Problem solution
your Lost Love back problem solution
family problem solution
husband-wife problem solution
That was very informative. Thanks for sharing with us. Keep up the good work.
ReplyDeleteRetail POS Software
Thanks for this. I really like what you've posted here and wish you the best of luck with this blog and thanks for sharing.
ReplyDeleteGuide to starting a restaurant in India
Hi, Thanks for Sharing available information about the GST. I started a new Restaurant SkyNest
ReplyDeleteThat was very informative as well as useful post.
ReplyDeleteRestaurant pos software India
Restaurant billing software
billing software for restaurant
Hi thanks for your information it is nice. Who want stay Best services apartment in hyderabad SkyNest offer best services in corporate stay full accommodation with low budget, full furnished who want move in hyderabad SkyNest is best to provide services apartment
ReplyDeleteSkynestIndia launch Service Apartments in Gachibowli Hyderabad. SkynestIndia Offering services in Restaurants, sweets, outdoor catering near our location in Gachibowli, Financial District, Nanakramaguda, Wipro circle, Gachibowli, Hyderabad.
Service Apartments in Hyderabad
Service Apartments in Gachibowli
Restaurants in Gachibowli Hyderabad
South Indian Restaurant In Gachibowli Hyderabad
Hyderabadi Biryani In Gachibowli Hyderabad
Corporate Lunch Services in Gachibowli
Corporate Party Orders In Gachibowli
Outdoor Catering Services In Gachibowli
Party Orders In Gachibowli
Sweet Recipes In Gachibowli
Love to work in Share market. got training from Share market classes in Chennai
ReplyDeleteKolkata Escorts
ReplyDeleteKolkata Escorts Service
Kolkata Escort Service
Kolkata Call Girls
Kolkata Female Escorts
Kolkata Model Escorts
Escorts Service in Kolkata
Kolkata High profile Escorts"
Kolkata Escorts girls
Kolkata Escorts Agency.
Kolkata Independent Escorts
Kolkata Model Girls Escorts
Escorts in Kolkata
Escort in Kolkata
Kolkata Celebrities Escorts
Kolkata Escorts
ReplyDeleteKolkata Escorts
Kolkata Escorts
Kolkata Escorts
Kolkata Escorts Service
Kolkata Escort Service
Kolkata Call Girls
Kolkata Female Escorts
Model Escorts Service in Kolkata
Female Escorts Service in Kolkata
Female Escorts Service in Kolkata
Kolkata Independent Escorts
Independent Kolkata Escorts
Escorts in Kolkata
Kolkata Escorts Agency
Call Girls in Kolkata
Kolkata Celebrities Escorts
Kolkata Independent Escorts
Kolkata Model Escorts
Kolkata High Profile Escorts Escorts
Kolkata Escort
Independen Escorts Service in Kolkata
Kolkata Independent Call Girls
Escort in Kolkata
Thank you For your information keep posting this kind of information. Thank you. Authentic Chinese Cuisine Sydney
ReplyDeleteThank you!
ReplyDeleteOffice space for Rent in HSR Layout
ESCORTS IN KOLKATA
ReplyDeleteKOLKATA ESCORTS
KOLKATA ESCORT
ESCORTS SERVICE IN KOLKATA
ESCORT SERVICE KOLKATA
ESCORTS SERVICE
ESCORT SERVICE
ESCORT
ESCORTS
FEMALE ESCORTS SERVICE KOLKATA
KOLKATA FEMALE ESCORTS SERVICE
INDEPENDENT ESCORTS SERVICE
INDEPENDENT ESCOTRTS SERVIC KOLKATA
KOLKATA INDEPENDET ESCORTS SERVICE
RUSSIAN ESCORTS SERVICE KOLKATA
RUSSIAN ESCORTS SERVICE
KOLKATA RUSSIAN ESCORTS SERVICE
FOREIGN ESCORTS SERVICE IN KOLKATA
INDEPENDEN FOREIGN ESCORTS SERVICE
ESCORT FOREIGN SERVICE IN KOLKATA
SEXY FEMALE ESCORTS SERVICE
SEXY MODEL ESCORTS SERVICE
MODEL ESCORTS CALL GIRLS
MODEL ESCORTS CALL GIRLS SERVICE KOLKATA
CALL GIRLS SERVICE KOLKATA
CALL GIRLS IN KOLKATA
KOLKATA CALL GIRLS
CALL GIRLS
CALL GIRLS KOLKATA
KOLKATA CALL GIRLS
FEMALE CALL GIRLS KOLKATA
FEMALE CALL GIRLS
SEXY CALL GIRLS SERVICE IN KOLKATA
ESCORTS SERVICE IN KOLKATA
KOLKATA FEMALE ESCORT SERVICE
TOP ESCORTS SERVICE KOLKATA
BEST KOLKATA ESCORTS SERVICE
CALL GIRLS SERVICE
ESCORTS SERVICE
ESCORT SERVICE
ESCORTS SERVICE IN KOLKATA
BENGOLI ESCORTS GIRLS
BENGOLI CALL GIRLS KOLKATA
KOLKATA ESCORTS SERVICE
FREE ESCORTS SERVICE KOLKATA
FREE WHATSAAP NUMBER ESCORTS
FREE WHATSAAP NUMBER OF CALL GIRLS
PHONE NUMBER OF ESCORTS SERVICE
FREE PHONE NUMBER ESCORTS SERVICE
MOBILE NUMBER OF ESCORTS SERVICE
ESCORTS IN KOLKATA
ReplyDeleteKOLKATA ESCORTS
KOLKATA ESCORT
ESCORTS SERVICE IN KOLKATA
ESCORT SERVICE KOLKATA
ESCORTS SERVICE
ESCORT SERVICE
ESCORT
ESCORTS
FEMALE ESCORTS SERVICE KOLKATA
KOLKATA FEMALE ESCORTS SERVICE
INDEPENDENT ESCORTS SERVICE
INDEPENDENT ESCOTRTS SERVICE KOLKATA
KOLKATA INDEPENDET ESCORTS SERVICE
RUSSIAN ESCORTS SERVICE KOLKATA
RUSSIAN ESCORTS SERVICE
KOLKATA RUSSIAN ESCORTS SERVICE
FOREIGN ESCORTS SERVICE IN KOLKATA
INDEPENDEN FOREIGN ESCORTS SERVICE
ESCORT FOREIGN SERVICE IN KOLKATA
if you are stuck with your management assignment then in this case you can opt for our Management Assignment help. we provide the best assignment help online.
ReplyDeleteWe also provide Human Resource assignment help for students across the globe. for more information contact us +16692714848
Presentation of you blog is appreciable....like it
ReplyDeleteKeep Sharing such useful articles...thank you
Divine Dosa is Authentic Indian restaurant in Las Vegas, Nevada...Visit us
best indian restaurant Las Vegas
best indian restaurant Las Vegas
dosa restaurant las vegas
best biryani in las vegas
I went over this web site and I believe you have a lot of wonderful information, – Gulvafslibning | Kurt Gulvmand bookmarked (:. 먹튀사이트
ReplyDeleteWhat i don’t understood is in reality how you’re no longer really a lot more well-appreciated than you may be right now. You are so intelligent. You already know thus significantly on the subject of this subject, produced me in my view consider it from a lot of various angles. Its like men and women are not interested until it is something to do with Woman gaga! Your individual stuffs nice. At all times handle it up! 먹튀사이트
ReplyDeleteThanks for sharing this informative post!
ReplyDeleteAMC Renewals Software
ReplyDeleteWe are assessed on a champion among other escort workplaces in the town. It is every one of the an immediate consequence of out of stunning Escorts who are here to show you the real significance of friendship and notion.
Kolkata escorts
park street escorts
salt lake escorts
Kolkata Russian escorts
Esplanade escorts
Dharmatala escorts
the information you have updated is very good and useful, please update further.
ReplyDeleteif you require any info regarding TAX & GSTR please visit
GST consultants in Bangalore
Company registration in Bangalore
For my part, the particular was presented an employment which is non secular enlargement. 토토사이트
ReplyDeleteFor my part, the particular was presented an employment which is non secular enlargement. Mega888 game client download
ReplyDeleteWholesale Cheap Handbags Will you be ok merely repost this on my site? I’ve to allow credit where it can be due. Have got a great day! 918kiss xe88 ios
ReplyDeleteI have been absent for some time, but now I remember why I used to love this website. Thank you, I will try and check back more frequently. How frequently you update your website? 토토사이트
ReplyDeleteBangalore escort services are largely here to give you an astonishing encounter. The most electrifying hours with intriguing Bangalore escorts are on your way.
ReplyDeleteBangalore Escorts
Elite Escorts
Call Girls
Escorts Service
Model Escorts
High Profile Escort
air-hostess-escorts
You have remarked very interesting points ! ps nice website . 토토검증
ReplyDeleteYou have remarked very interesting points ! ps nice website . 토토사이트
ReplyDelete놀라운 기사. 분석하기 위해 최면. 나는 정말 좋은 기사를 분석하는 것을 좋아합니다. 많이 존경합니다! 계속 흔들어. 먹튀검증
ReplyDeleteAmazing experience after visiting this site which is really full of information and someone have information for.And also you could buy some cosplay costumes from http://www.cosjj.com/ in high quality. news update for latest updates in urdu language this is best . Just have fun. 안전놀이터
ReplyDelete훌륭한 기사. 읽기 매우 흥미 롭습니다. 나는 정말 좋은 기사를 읽는 것을 좋아합니다. 감사! 계속 흔들어 먹튀검증
ReplyDeleteTo start with You got an awesome blog .I will be keen on more comparative points. I see you got extremely exceptionally valuable themes, I will be continually checking your blog much appreciated 먹튀검증
ReplyDeleteIt's always exciting to read articles from other writers and practice something from their web sites. 메이저사이트
ReplyDeleteThis is a great piece of writing that brings forth innovative ideas and thoughts. What makes it unique is the simplistic way of writing and presenting the idea that keeps the reader engaged.
ReplyDeleteResto-Bar Franchise
I must confess that the writer has put in a lot of effort to bring together the best points. The article doesn’t seem to be lengthy; rather, it is highly engaging and leaves you buzzing with a wiliness to read more.
ReplyDeleteRaasta Franchise.
The topic clearly highlights the need for the hour. The writer has put forth the effort to bring forth the idea in a simple yet impactful manner.
ReplyDeleteOpen-air brewery in Gurgaon
I have read so many articles on this topic, but the way the writer has put in all the points is commendable. Simple words and effective content that’s how I will sum it up. A must-read, I must admit.
ReplyDeleteRomeo Lane Franchise in Delhi
I am surely going to come back to this page. The writer has made a genuine effort to bring together all the points. If you, too, are looking for a good read, you must visit this page.
ReplyDeleteMamas Buoi Franchise
I want to congratulate this website for updating the content regulalry. This is my second visit, and I will be coming back again to read some interesting info.
ReplyDeleteWE Qutub Restaurant Franchise in Delhi
Wow! Thank you! I permanently wanted to write on my site something like that. Can I implement a fragment of your post to my website?
ReplyDelete먹튀검증
Nice Blog..Thanks for sharing this helpful information & i found some information about Sumadhura Horizon and it is a residential project developed by Sumadhura Infracon Pvt. Ltd. located in Kondapur, Hyderabad. It is provides 3BHK luxury residential flats.
ReplyDeleteI found your this post while searching for some related information on blog search...Its a good post..keep posting and update the information. Coffee Rani
ReplyDeleteNICE BLOG!!! Your blog is very informative for us. Shree Caterers Catering and Wedding Planners in Bangalore are specialists at providing the finest food and service for your big day. Brahmin Marriage Caterers in Bangalore | Tamil Brahmin Caterers in Bangalore | Brahmin Caterers in Bangalore | Tamil Nadu Style Catering Services in Bangalore | Best Vegetarian Caterers in Bangalore
ReplyDeleteVery nice post thanks for sharing valuable information, for best market research report please visit Bharat Book Book
ReplyDeletenice effort to write such informative blog
ReplyDeletegrind and brew coffee maker online shopping in pakistan
vagina tightening cream shopping online in pakistan
Buy lycopene supplement online in Pakistan
loreal deodorant roller online shopping in pakistan
platinized titanium anode online in Pakistan
heng long tank model online in Pakistan
underglaze transfer sheets online in Pakistan