NRAI Urges Government to Restore Input Tax Credit for Restaurants
The National Restaurant Association of India (NRAI) has called on the government to take action ahead of the upcoming Union Budget. In a letter addressed to Finance Minister Nirmala Sitharaman, the NRAI emphasized the need to restore input tax credit (ITC) for restaurants while proposing an increase in the GST rate from the current 5 per cent to 12 per cent.
Restoration of Input Tax Credit
The NRAI highlighted the unique challenge faced by the restaurant industry, being subjected to a 5 per cent GST rate without the benefit of ITC. This absence of ITC not only diminishes operating margins but also significantly raises the capital budget for new projects, thereby impeding expansion plans and hindering sector growth.
NRAI President Kabir Suri emphasized the potential for growth within the food services industry, noting its substantial contribution to government revenue and status as one of the largest employers in India.
Equitable E-commerce Policy
Besides advocating for GST reform, the NRAI underscored the importance of an equitable e-commerce policy. While acknowledging the convenience brought by online platforms, concerns regarding fair competition and equitable growth persist. The NRAI proposed balanced policies and regulations to foster a level playing field, safeguarding the interests of restaurants, delivery partners, and consumers.
Rationalization of Licenses and NOCs
The NRAI also urged for the rationalization of licenses and No Objection Certificates (NOCs), citing the burdensome requirement of obtaining 15-25 licenses/NOCs on average to operate a restaurant. Simplifying this process would facilitate expansion beyond core geographies and alleviate operational complexities.
Support for SMEs
In recognition of the challenges faced by small and medium-sized enterprises (SMEs), the NRAI called for targeted subsidy schemes and improved access to debt financing. Subsidies on essential ingredients, utilities, and waste management were proposed to reduce operational costs, particularly benefiting struggling restaurants in smaller towns and cities.
Other Recommendations
Additionally, the NRAI proposed:
| Recommendation | Action |
|---|---|
| Grant industry status to the food services sector | Bring multiple benefits through central or state industrial policies, including easier finance, special schemes, subsidies, and fast-track clearance processes. |
| Allow longer working hours for the restaurant sector | Provide flexibility to accommodate consumer demand. |
| Reduce GST on eco-friendly packaging materials | Support sustainable practices in the food delivery segment. |
The NRAI’s recommendations aim to bolster the resilience and growth prospects of the restaurant industry, thereby contributing to overall economic growth and employment opportunities in India.
(This story has not been edited by Financemonk staff and is published from a syndicated news agency feed – PTI)