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UNIVERSITY OF MUMBAI

NCRD
STERLING COLLEGE OF ARTS, COMMERCE & SCIENCE

NERUL, NAVI MUMBAI

COLLEGE CODE: 552

PROJECT REPORT ON

“A Study On Impact of GST on Restaurants’’

SUBMITTED BY:

“RAKHI G. WADEKAR”

ROLL NO. 708

PROJECT GUIDANCE:

“RUCHAM THAKUR”

IN PARTIAL FULFILLMENT FOR THE COURSE OF

BACHELOR OF MANAGEMENT STUDIES (B.M.S)

T.Y.BMS. (SEMESTER VI)

ACADEMIC YEAR 2018-2019.


CERTIFICATE

This is to certify that Mr.ABHISHEK THAKUR has satisfactorily carried out the
project work on the topic; “A Study On Impact of GST on Restaurants” under the
guidance of Prof. RUCHAM THAKUR in partial fulfillment of Bachelors
management studies (BMS) Semester VI as per the curriculum laid by the University of
Mumbai, during the academic year 2018-2019.

Date:

--------------------------- ---------------

--------------------------------------

Project Guide Principal

(Prof. RUCHAM THAKUR)

------------------------ -------------------------------

Course Coordinator EXTERNAL EXAMINER

(Prof. Ranjeet Thakur)

---------------------------------

INTERNAL EXAMINER

DECLARATION
I MR. ABHISHEK THAKUR student of bachelor Management Studies (BMS)
and

Commerce of University of Mumbai declare that the work done on the project “A
Study On Impact of GST on Restaurants” in the academic year 2018-2019 is
original. Any reference used in this

Report has been duly acknowledged.

To the best of my knowledge and belief, the subject matter presented here is
original.

DATE:______________
ACKNOWLEDGEMENT

I would like to express my gratitude to NCRD Sterling College of Arts,


Commerce, & Science, Nerul (E) for giving me an opportunity to work on this
project. Because of this project, I could understand my topic: “A STUDY OF
EFFECTINESS OF TIME MANAGEMENT” in a better way.

I would also like to thank our co-ordinator and my project guide, RUCHAM
THAKUR for helping out with this project. Without their support and valuable
guidance, this

Project would not have been a success. They helped me immensely by keeping
me motivated throughout the course of the project.

I would like to thank my college for providing us with various facilities like
the Computer lab, Library, etc. which helped me gather valuable information for
my project.
Executive Summary

 Introduction of Project

This project is about the GST on Restaurants in India. There are too high GST on
restaurants in the country, every state levies taxes in accordance to its
convenience.

 Project Title
The title of this project is “GST ON RESTAURANTS IN INDIA”. As the name
indicates it is the study of the taxes levied on Restaurants in the country.

 Objectives
 One country – One Tax.
 Consumption based tax instead of Manufacturing.
 Uniform GST Registration, Payment and Input Tax Credit.
 To eliminate the cascading effect of Indirect taxes on single
transaction.
 Reduce tax evasion and corruption.
 Increase tax to GDP Ratio and revenue surplus.
 Increase compliance.
 Reducing economic distortion

Serial no. Topic


1. Introduction.
2. Review of Literature.
3. Research Methodology.
4. Data Analysis.
5. Secondary Analysis.
6. Finding & Recommendation.
7. Conclusion, Limitation & Future Scope.
8. Bibliography.
CHAPTER-1

INTRODUCTION

The Goods and Service Tax (GST) is a value-added tax levied on most goods and
services sold for domestic consumption.

The GST is paid by consumers, but it is remitted to the government by the business
selling the goods and services.

Goods and Service Tax (GST) is an indirect tax.

GST was introduced in India on 1 July 2017 and was applicable throughout India which
replaced multiple cascading taxes levied by the central and state governments.

It was introduced as The Constitution (One Hundred and First Amendment) Act 2017,
following the passage of constitution 122nd Amendment Act Bill.

1. The GST is governed by a GST Council and its Chairman is the Finance minister
of India.
2. Under GST, goods and services are taxed at following rates, 0%,5%,12%,18%
and 28%.
3. The is a special rate of 0.25% on rough precious and semi-precious stones and 3%
on gold.
4. In addition, a Cess of 22% or other rates on top of 28% GST applies on few items
like aerated drinks, luxury cars and tobacco products.
5. GST replaced a slew of indirect taxes with a unified tax and is therefore set to
dramatically reshape the country’s 2 trillion-dollar economy.

Launch

 The Goods and Services Tax was launched at midnight on 1 July 2017 by the

President of India, Pranab Mukherjee and Prime Minister of India, Narendra Modi.

 The launch was marked by a historic midnight (30 June - 1 July) session of both
the houses of parliament convened at the Central Hall of the Parliament. Though
the session was attended by high-profile guests from the business and the
entertainment industry including Ratan Tata, it was boycotted by the opposition
due to the predicted problems that it was bound to lead to for the middle and
lower class Indians.

 It is one of the few midnight sessions that have been held by the parliament – the
others being the declaration of India's independence on 15 August 1947, and the
silver and golden jubilees of that occasion.

 Members of the Congress boycotted the GST launch altogether. They were joined
by members of the Trinamool Congress, Communist Parties of India and the
DMK. The parties reported that they found Virtually no difference between the
GST and the existing taxation system, claiming that the government was trying to
merely rebrand the current taxation system They also argued that the GST would
increase existing rates on common daily goods while reducing rates on luxury
items, and affect many. Indians adversely, especially the middle, lower middle
and poorer classes.
History

1. The reform process of India's indirect tax regime was started in 1986 by
Vishwanath Pratap Singh, Finance Minister in Rajiv Gandhi's govern of the
Modified Value Added Tax (MODVAT). Subsequently, Manmohan Singh the
then Finance Minister under PV Narasimha Rao, initiated early discussions on a
Value Added Tax at the state level.

2. A single common "Goods and Services Tax (GST) was proposed and given a go
ahead in 1999 during a meeting between the then Prime Minister Atal Biha
Vajpayee and his econon advisory panel which included three former RBI
governor IG Patel, Bimal Jalan and C Rangarajan Vajpayee set up a committee
headed by the the finance minister of West Bengal, Asim Dasgupta to design a
GST model.

3. The Ravi Dasgupta committee was also tasked with putting in place the back-end
technology and logistics (later came to be known as the GST Network, or GSTN,
in (2017) for rolling out a uniform taxation regime in the country. In 2002, the
Vajpayeegovernment formed a task force under Vijay Kelkar to recommend tax
reforms. In2005, the Kelkar committee recommended rolling out GST as
suggested by the 12thFinance Commission.
4. After the fall of the BJP-led NDA government in 2004, and the election of a

Congress led UPA government, the new Finance Minister P Chidambaram in February
2006 continued work on the same and proposed a GST rollout by 1 April

2010. However in 2010, with the Trinamool congress routing CPI(M) out of power

in West Bengal. Asim Dasgupta resigned as the head of the GST committeeDasgupta
admitted in an interview that 80% of the task had been done.

5. In 2014, the NDA government was re-elected into power, this time under the

leadership of Narendra Modi With the consequential dissolution of the 15th Lok

Sabh, the GST Bill-approved by the standing committee for reintroduction

lapsed Seven months after the formation of the Modi government, the new Finance

Minister Arun Jaitley introduced the GST Bill in the Lok Sabha, where the BJP had a
majority In February 2015, Jaitley set another deadline of 1 April 2017 to implement
GST In May 2016, the Lok Sabha passed the Constitution Amendment Bill paving way
for GST However, the Opposition, led by the Congress demanded that the GST Bill be
again sent back to the Select Committee of the Rajya Sabha due to disagreements on
several statements in the Bill relating to taxation Finally in August 2016, the Amendment
Bill was passed Over the next 15 to 20 days. 18 states ratified he GST Bill and the
President Pranab Mukherjee gave his assent to it.

6. A22-members select committee was formed to look into the proposed GST laws.

7. State and Union Territory GST laws were passed by all the states and Union

Territories of India except Jammu & Kashmir, paving the way for smooth rollout

the tax from 1 July 2017.


8. The Jammu and Kashmir state legislature passed its GST act on 7 July 2017,
therebyensuring that the entire nation is brought under an unified indirect taxation
system.

9 There was to be no GST on the sale and purchase of securities. That continues to be
governed by Securities Transaction Tax (STT).

Types of Indirect Taxes before GST

1. Service Tax
Service tax is a tax levied by the government on service providers on certain
service transactions, but is actually borne by the customers.
This tax is levied by entitles for rendering services like consulting, legal, and
other such services.
This tax is collected from the services recipients and paid to Central Government.
From 1st June 2016, service tax was 14% with Swacch Bharat Cess (0.5%) and
KrishiKalyan Cess (0.5%) bringing up the applicable rate to 15% Small service
providers with an income of less than INR 10 lakh per annum are exempted from
paying this tax.

2. Excise Duty
This duty is applicable on all goods that are manufactured in India.
This Indirect tax is payable by the manufactures and often passed on to the
customers.
This indirect tax in India is levied by the Central Government and works
according to the provisions of the Central Excise Act,1944.
3. Value Added Tax (VAT)

Value Added Tax (VAT) is imposed on the sale of movable goods in the nation.
VAT is levied at all stages of the production and distribution channel that include
an instance of value addition.
This tax is levied by the State Governments under Entry 54 of the State List.

4. Customs Duty

It is one of those indirect taxes that are applicable for bringing imported goods
into the country.
In certain instance, this duty may also be levied on exported goods.
The Customs Act, 1962 provides regulations on the levy and collection of this
duty, import and export procedures, penalties, prohibitions and offence.

5. Securities Transaction Tax (STT)


The indirect tax is imposed when stock is sold or purchased through any Indian
stock exchange.
STT was introduced in 2004 and applicable to shares, mutual funds, and future
and options transactions.
STT was imposed to reduce the short-term capital gains tax and eliminate long-
term capital gains tax.
6. Stamp duty

This is an indirect tax charged by state governments on the transfer of immovable


property within their jurisdiction.In addition, stamp duty is mandatory on all types
of legal documents.Its rates vary from one state to another.

7. Entertainment tax

The state government charge such tax on every transaction related to


entertainment. Some examples are movie tickets, video game arcades, stage
shoes, exhibitions, amusement parks, and sports-related activities.
Merging of indirect taxes into GST-

Because there are numerous indirect taxes in India, the buyers pay higher prices
for goods and services.

The Government has proposed combining various taxes under a single tax known
as Goods and Service Tax (GST).

Merging different taxes is expected to improve governance and reduce the


complexities of complying with multiple rules and regulations.
Types of taxes under GST-
There are four kinds of taxes under GST.

 SGST
 CGST
 IGST
 UTGST

SGST
STATE GOODS AND SERVICE TAX is the part of tax diverted to the state

government which is credited to revenue department of state government. This

is generally equivalent to CGST This compensate the loss of existing VAT

or Sales Tax revenue to state government In the case of local sales, 50%

quantum of tax amount under GST is diverted to IGST TAX.

CGST

CENTRAL GOODS AND SERVICE TAX is the share of GST TAX

diverted to revenue department of central government and is also equivalent to

CGST This share of tax compensated the loss of existing excise duty and

service tax to the central government. In the case of local sales, balance 50

quantum of GST is transferred to CGST.

IGST

INTEGRATED GOODS AND SERVICES TAX levied on inter-state


sales and purchase is made One part of this tax transferred to central

government and another to state government to whom goods and services

belong The IGST is charged only in case of inter-state sales or when

transactions between two states involved.

UTGST

The UTGST Act expands to Union Territory Goods and Service Tax.

UTGST, the short form of Union Territory Goods and Services Tax, is nothing but
the GST applicable on the goods and services supply that takes place in any of
the five territories of India, including Andaman and Nicobar Islands, Dadra and
Nagar Haveli, Chandigarh, Lakshadweep and Daman and Diu called as Union
territories of India.

Union Territory GST will be charge in addition to the CGST.


CHAPTER 2

REVIEW OF LITERATURE

According to Purohit (1982) Examined the fiscal importance of sale tax in the state
finances in India Overall, the share of sales tax in own revenue of the states increased
from about 31 per cent in structure in India and pointed out that wide variations prevailed
among different states 1960-61 to 57 per cent in 1978-79. He presented economic
analysis or as in the rates of sales tax. There was multiplicity of rates and in certain states
there were as many as 17 dif rate care price which had no justification He pointed out that
states should follow Orissa pattern, where there were only four rates. While examining
the taxation of inputs, he suggested elimination of the tax on inputs or full set-off of the
tax paid on raw materials. Examining the arguments for and against first an point tax, he
suggested a mixture of different system.

GOVINDA RAO (2000) in his article entitled throws light on major changes in tax
system in several countries over the last two decades for a variety reasons. The objective
of this paper is to analyze the evolution of the early 1990s. This paper describes and
assesses the introduction since direct and indirect taxes, their revenue and equity
implications and new forms of achieved in their implementation. The paper concludes
that after eight years of reform improving the tax system remains a major challenge in
India OLAOYE CLEMENT OLATUNJI 9 (2009) in his article entitled "A Review of
Value Added Tax (VAT):

Administration in Nigeria discussed as a result of the uncommon nature of VAT

system, majority of the populace in the country are unaware of its existence consequently
the low credibility of government makes people scom the payment and collection of VAT
The purpose of this study is to review the effectiveness of the administration of VAT as it
relates to how it can improve government revenue and through more light on its
contribution to economic growth of Nigeria In addition to the preliminary interviews was
a review of study relating to the problems of administration and collection machinery of
VAT Simple percentages and chi-square

(x2) were used for data analysis. There is need to embark on business enumeration in
each state with a view to having data base on business Seminars and workshops so far
organized on this issue are narrow its scope and design There should be functional VAT
offices in every council area to coordinate a vigorous campaign to educate people and
seek their cooperation This will no doubt erode the negative attitude that some of the
consumers have developed towards VAT The government should adequately make
provision for retrieving the proceeds of VAT from companies and other agents of
collection.

CA SUDHIR HALAKHANDI RO 00 In his article entitled

“Goods and Service Tax-An Introductory Study”, this article focuses on how this tax
system will work, and discusses the problems likely to be faced by the Central

Government while introducing this tax Also briefly touches upon the Present state level
VAT and Central Service Tax He highlights that there is no principle difference between
present tax structure under VAT and GST as far as the tax on goods is concerned because
GST is also a form of VAT on Goods and services Here at present the sales tax, with an
exception of CST, is a VAT system and in case of service tax the system also has the
CENVAT credit system hence both sales tax and service tax are under VAT system in
our country. At present the goods and services are taxed separately but in the difference
will be vanished. The overall system of GST is very much similar to the VAT which can
be considered as first step towards GST.
JAIDEEP MISHRA (CBEC 2011 in his concept paper titled prepared by Central

Board of Excise and Customs stresses that keeping certain service provider outside

tax chain would increase the effective tax on total supply by preclude the benefit of tax
credit in subsequent stages of output. An efficient system of tax setoff would courage
sourcing from the most efficient suppliers and discourage doing everything in house. By
way of definition, a service is deemed as anything that does not constitute supply of
goods, money or immovable property, save for three specific instances in the context of
an employee and employer, that provided by a constitutional authority, etc., or local
government, and that labeled as manufacture as per the Central Excise Act.

THIRTEENTH FINANCE COMMISSION ON NATIONAL COUNCIL OF APPLIED


ECONOMIC RESEARCH IN THEIR KEPORTI2 (2009)

states that the broad objectives of this study refers to analyzing the impact of introducing
comprehensive goods and services tax (GST) on economic growth and international trade
changes in rewards to the factors of production, and output, prices, capital, employment
efficiency and international trade at the sectoral level Analysis in this study indicates that
implementation of a comprehensive GST in India is expected to lead to efficient
allocation of factors of production thus leading to gains in GDP and exports. This would
translate into enhanced economic welfare and returns to the factors of production, viz.
land, labour and capital.

INE LEJEUNE 13 (2010) In her article titled "Shifting from the balance” explains about
the trend away from direct forms of taxation and towards indirect taxes continues
inexorably, China and India have both signaled their intention to move towards a uniform
VAT system to replace current regimes. The countries of the Gulf Cooperation Council
(GCC) are working towards a VAT system. As countries reform and implement their
indirect tax Systems, they need to confront a number of challenges. And we see some
significant programs of reform arising in response to these Notably, the European Union
has embarked on a once in a lifetime consultation on reform of the VAT system in order
to develop recommendations for a simpler and easier to administer value added tax
system within what are now 27 Member States of the EU.

The issues that this programme of consultation seeks to address are relevant to all

countries that are looking to create efficient, balanced and effective indirect tax systems.

PARTHASARATHI SHOME: In this report presented to the tenth plan entitled as

"Tax Policy and Tax Administration for the Tenth Plan (2001)”

Focuses on the necessary stance of the authorities in the area of tax policy and tax

administration for the Tenth Plan comprises many facets, For central taxes the

of corporation and personal income taxes that have demonstrated the highest

he tanned further. Measures include improvements in the tax structures well as in tax
administration The Former Issue has to focus on minimizing exemptions incentives and
improving the base of the Tax IMA ne minimum alternate tax (MAT). The latter issue
should include increasing the number of assesses while reducing taxpayer burden to
improve compliance, and introducing Comprehensive and meaningful computerization
for major functional areas of administration Indirect taxes have demonstrated low
buoyancy which is likely to continue given anticipated structural changes in Indirect tax
structure.

A composite reduction in customs tariffs to Internationally comparable levels for

increased competition and global integration should be kept space. This is reflected in the
projected customs revenue being allowed to decline marginally in terms of GDP during
the Tenth Plan period even in light of exemptions under the customs being streamlined. A
comprehensive central value added tax (CENVAT) that allows full credit for all inputs
including capital goods and minimizes the number of rates could also have a short term
negative revenue impact. But this has to be accepted to eliminate distortions affecting
industry adversely. If multiple and complex exemptions are removed, robust revenue
improvement could nevertheless be realized from both Union excises and a state level
VAT Base expansion to include the consumption of services comprehensively should be
carried out forthwith at the level of both the Centre and states It would also support the
objective of improved revenue productivity. States should rationalize their sales taxes
first and then introduce a broad based VAT by April 2002 as has been agreed. Equally
importantly, they have to address the issue of taxation of interstate trade under a state
level VAT. Without that, the VAT currently focused only on intra-state trade would
remain

distortion States should be allowed to tax the consumption of those services that are ofan
intrastate nature. This would help compensate loss of revenue in some states as theymove
to a VAT. The ultimate goal should be to have a harmonized VAT comprisingboth the
Centre and states State exciscs as well as smaller taxes have to be rationalized further and
their revenue potential fully realized. A goal of 4 percent of GDP in additional resource
mobilization, that would be required for a 15 percent nominal growth rate during the
Tenth Plan, would be difficult to achieve from taxes alone. The Group did not find
convincing evidence from the Centre or the states of adequate preparedness for it. Their
objective seems to be one of maintenance of tax to GDP levels. Though the Group has
indicated several measures for additional resource mobilization to meet the revenue goal,
the requirement for additional resources for the Tenth Plan has to be couched also in the
correction of public utility charges for which there exist many possibilities. This aspect
was, however, outside the scope of analysis of the Advisory Group.
Impact of GST

In the case of indirect taxes, the burden was on end customer or consumer.
But due to

implementation of one tax in the whole country the overall cost of


production of all good will be reduced but on the other hand in case of
services, it will increase after the implantation of GST but gets abolished
which ultimately reduces the cost of goods. Currently, we pay 30-35% tax
on a commodity, In the case of some goods, direct and indirect taxes
imposed by government raise its cost upto 30% After the implementation of
GST, it will reduce. The GST also reduces the cascading effect of tax which
helps in making the trade simple and reduces the tax Burden of
Entrepreneurs.
CHAPTER 3

RESEARCH METHODOLOGY

The research methodology was divided into two stages which involve
sources for data in order to achieve the objective of project.

1. Firstly, I have collected data by referring various websites, research


papers, newspaper articles, etc. And have ananged it in a systematic
way for convenience reference.
2. Secondly I have collected data by interviewing people, getting their
views and asking them ill up the questionnaire have prepared on the
basis of the objectives of my project
RESEARCH DESIGN

In this project multi stage sampling is used because the total population was too large and
due to time constraint it was not practically possible to make a list of entire population at
the first stage I have gathered data from newspapers and various websites. The second
stage consists of set questions asked to a group of people. The approach was with the
help of google survey.
CHAPTER 4

DATA ANALYSIS

DATA COLLECTION METHOD

SECONDARY DATA ANALYSIS

Research papers, books were studied and various websites and online articles have been
referred.

PRIMARY DATA ANALYSIS

We collected information from the subjects by means of a survey.


CHAPTER.5

SECONDARY DATA ANALYSIS

GST effect on Consumer:

Single and transparent tax proportionate to the value of goods and services: Due to
multiple of taxes being levied by the Centre and State, with incomplete or no input tax
credits liable at progressive stages of value addition, the cost of most goods and services
in theory today are laden with many hidden taxes. Under GST there would be only one
tax om the manufacturer to the consumer, leading to transparency of taxes paid to the
final consumer.
We are extremely thankful to the government for making these much required changes in
the GST regime. This will help restaurant across India rationalize tariffs, said Oberoi.

National Restaurant Association of India Vice-President Rahul Singh said denying the
input push up prices by around 10% on the menus.

“So effectively the consumer pockets will get a marginal benefit, and not as it seems," he
added. Restaurateur Zorawar Kalra, MD of Ever stone-backed Massive Restaurants
which restaurant chains like Farzi Cafe, said while the move is great for the consumers a
improve spending and increase the propensity of eating out, it remains to be seen if the
move will positively impact the bottom line of the business.

"The removal of input tax credit is a big problem as costs for the restaurants which
includes rents etc. will go up. We have to pay GST for all this but we won't get it back.
The margins could get significantly constrained. For a business, it remains to be seen if
the volumes will offset the lack of input tax credit," said Kalra.

He said that this might become unsustainable for some Quick Service Restaurants(QSRs)
here economical meals and might lead to increased costs in some cases.
REGISTRATION OF GST

GST on Restaurants-

18% GST on food from non-AC & AC restaurants.


 A uniform GST rate of 18% will be charged on takeaways as well as food served
from a non-AC area of hotel or restaurant if any of its part has a facility of air
conditioning, government has said.
 The new Goods and Service Tax(GST) regime, which was rolled out from July 1,
provides for levy of 12% on food bill in non-AC restaurants.
 The Tax rate for AC restaurants and those with liquor license will be 18% while
5-star hotels will charge 28% GST.
 The Central Board of Excise and Customs (CBEC) has clarified through an FAQ
on the GST rates that will be levied by restaurant-cum-bars where the first floor
area is air-conditioned and used for serving food and liquor while ground floor
only serves food is Non-AC.
 The CBEC said tax will have to charge at 18% irrespective from where the supply
is made, first floor or second floor.
 If any part of the establishment has AC facility, then the rate will be 18% for all
supplies from the restaurant.
 With regard to tax rates that would be charged for take away food from such
restaurants, is to be charged 18%.
Understanding Your Restaurant Bill

As an end consumer, we hardly pay attention to our food bill in these


restaurants and most of us are not even aware of the components included in
it.

If you revisit your food bill from the pre-GST fine-dine experience, you’ll
find Service Tax, Service Charge, VAT being added over and above the
food value.

First, let us understand the components of the bill:

 VAT: This is the tax charged on the food portion of your bill.
 Service tax: This is the tax charged on the services provided by the
restaurant. [To avoid unnecessary complications government had
already bifurcated the service portion and food portion and charge
taxes accordingly.]
 Service Charge: This is a charge applied by the restaurants and not
by the government. THIS IS NOT A TAX. It should not be confused
with service tax as this is an income to the hotels. Service tax is not an
income and merely a tax collected from you and submitted to the
government.

However, the rates under GST are vastly different than what you would find
before the tax policy change. Let us look at these changed rates below.

GST Rates on Eating Out

Type of Restaurants GST Rate


All restaurants 5% no ITC
Restaurants within hotels (room tariff 5% no ITC
<7,500- 5% without ITC
Restaurants within hotels (room tariff 18% with ITC
>7,500 ) still 18% with ITC
Outdoor catering 18% with ITC
In the GST regime, the Service Tax and VAT amount will be subsumed into
one single rate, but you may still find service charge doing rounds on your
food bill.

Below we have provided a high-level comparison of how your food bill will
look pre and post-GST:

So, at a standard rate of 18% under GST, a consumer will save around Rs.
55 on a transaction value of Rs. 2,200. Here, we have assumed that VAT is
applicable at 100% of the value without any abatement. Furthermore, if we
see the effective rate of tax under VAT regime, it sums up to around 20.5%
which will come down to 18%.
Restaurants to levy 5% GST

Restaurants to levy 5% GST from today, food bills likely to come down. The GST
Council, in its 23rd meeting in Guwahati, had slashed the tax rate from 18 percent to just
5 percent However, restaurants will not be able to take the benefit of input tax credit.
With the Goods and Service Tax (GST) levy on both AC and non-AC restaurants coming
down to percent from today, dining out is expected to get a lot cheaper.

However, restaurants will not be able to take the benefit of input tax credit (ITC) Liquor
however, will attract state levies like VAT as it was kept outside the GST regime. The
new tax structure for restaurants, which is being implemented from November 1, comes
days after the Finance Minister Arun Jaitley expressed his displeasure over eateries not
passing on the benefit of input tax credit to restaurant-goers. "All members of the GST
Council felt that input tax credit (ITC) to restaurants is not passed on customers Goods
and Service Tax (GST) was being charged on existing rates which put additional tax
burden on restaurant goers. Thus, we decided that restaurant industry will not get the
benefit of ITC,

Finance Minister Arun Jaitley had said in the 23rd GST Council meet, tax rate for all AC
and non-AC restaurants was fixed at 5 percent "Since they did not pass on the ITC
benefit to customers, they will not be eligible for the benefit themselves," Finance
Minister Arun Jaitley had said Restaurants inside hotels will also levy 5 percent GST,
except in starred hotels where the tariff is Rs 7,500 or more The rate for restaurants in
starred hotel will remain 18 per cent along with the benefit of input tax credit. Outdoor
catering will also be taxed at 18 per cent along with ITC.

Effectively, it will be a universal composition scheme in the restaurant sector, said


Finance Minister Arun Jaitley had said during a press meet after the Council meet.

Meanwhile, restaurant sector seems discontent with the decision of not getting the ITC
benefit. The government will be short-changed," Rahul Singh, president of National.
Restaurant Association of India (NRAI) told CNBC TV 18 on Friday. The very concept
of Input Tax Credit (ITC) is central to GST which is to prevent cascading of taxes,"
Singh had said.0

Welcoming the move by the GST Council, the apex industry body said it had sought
bringing down GST rate on restaurants to 12 per cent with input tax credit or at 5 per cent
withoutinput tax credit. "We are extremely thankful to the government for making these
much required changes in the GST regime. This will help restaurants across India
rationalize tariffs." FHRAI president Garish Oberoi had said

\
 Objectives

 One country – One Tax.


 Consumption based tax instead of Manufacturing.
 Uniform GST Registration, Payment and Input Tax Credit.
 To eliminate the cascading effect of Indirect taxes on single
transaction.
 Reduce tax evasion and corruption.
 Increase tax to GDP Ratio and revenue surplus.
 Increase compliance.
 Reducing economic distortion.
PRIMARY DATA

We collected information from the subjects by means of a survey. Furthermore, the major

technique that we used to approach our subjects was by using google survey which
helped us

on reaching a more number of respondents

SAMPLE DESIGN-

Sampling Unit: Random people to whom the survey was sent.

Sampling Size: 103 potential customers

Sampling technique: multistage sampling

Sampling area: Navi Mumbai and Mumbai


ANNEXURE

Questionnaires

1. Is GST more convenient than older tax system?

 YES
 NO

2. Can restaurant charge VAT after GST?


 Yes
 No

3. What difference did GST made?

4. Do you think implementation of GST would benefit you in long term?


 Yes
 No

5. Is there any impact of GST on Bills?


 Increasing price in bills
 No change in bills

6. What can be the negative impact of the GST on the Restaurant


Industry?
 Decrease in the rate of the

7. How would GST affect you as a restaurant owner?


8. Would GST impact the restaurants selling alcoholic beverages?


 Yes
 No
9. What will we see in a restaurant bill after GST implementation?
 SGST/CGST
 IGST

10.Is it compulsory to pay service charge along with GST?


 Yes
 No

CHAPTER.6.

FINDINGS AND RECOMMENDATION


CHAPTER 7
Conclusion

The GST regime will definitely help the sector in long run However what
will be the immediate effect on restaurant it's be unclear because as of now
GST law have not covered any specific section for restaurant industry as
they are availing abatement exemption in service tax.

Under the GST time service Tax and VAT amount will be subsumed into
one single rate, but you may still find service charge doing rounds in your
food bill.

Restaurant Bills/EATING OUT:

Your restaurant hull would depend on whether you dined at an AC or Non-


AC establishments which do not serve alcohol Now dining at five-star hotels
will be charged at 1895 GST rate and the Non-AC restaurants will be
charged 12 and a 59. GST will be charged from small hotels, dhabas and
restaurants who do not cross an annual turnover of INR 50 Lakh.
NEW DELHI Eating out would get cheaper as the 6S Council slashed rates
on Friday for air conditioned and non-air conditioned restaurants to 5%
without input tax credit.

GST Council had previously pegged GST rates for air-conditioned eateries
and those with liquor licenses at 18%, and non-air-conditioned restaurants at
12%. However, the move does not apply to restaurants located inside hotels
with tariffs of Rs 7.500 and above and outdoor catering, which will continue
to be charged at 18 % with the benefit of input tax credit.

The move looks like a win-win for consumers, and some industry
association members welcomed it, while others were apprehensive about its
feasibility given the removal of input.
The Federation of Hotels & Restaurants Association of India (FHRAD
welcomed the GST Council’s decision to cut tax rate for restaurants to 5%.
A delegation led by FHRAI president Garish Oberoi had earlier met with
the GST Council members in Guwahati and had requested them to either
bring down the GST rate on restaurants to 12 with input credit or 5%
without input credit tax credit and said prices might go up as a result.
“But even then it should still work out to be cheaper for consumers, “he
added.
“We welcome the move by government to reduce GST on AC restaurants
from
18% to 5%. This is a very progressive step which will make eating out and
ordering food at home much more affordable for consumers and will lead to
a significant growth in the organized restaurant segment said,”Hari Bhartia,
co-chairman, Jubilant Foodworks, the master franchisee for Domino's.

McDonald's said it will take some time to assess the development.


ICRA estimated that dinint out should we 7119 cheaper for consumers with
the slashing of rates.

“Most major inputs for restaurants like grains (not packaged), poultry,
seafood and vegetables are exempt from GST and the input tax credit
available to restaurants was anyway negligible. With most organized
restaurants struggling to grow footfalls over the past two years this bonanza
is a welcome relief,” said Pavethra Ponninah,sector head, corporate ratings,
ICRA.

Dilip Datwani, president of the Hotel and Restaurant Association of Western


India (HRAWI) said that while the overall move is welcome, denying the
input tax credit benefit is unfair. “There has not been any reduction of prices
in raw materials for us. In fact, post introductionof GST the cost of
operations and raw materials have actually gone up. The move to remove
input tax credit amounts to double taxation and is national We wish that the
GST Council had considered that rent and interest attract 18% GST " he
added.

The GST Council has decided that all restaurants will not attract GST at a
rate of five percent and will not be extended any input tax credit. Effectively,
it will be a universal composition scheme in the restaurant sector,said
Finance Minister Arun Jaitley during the Council meet.

The GST Council meet for the 23rd time, where it approved the highest
number of tax cuts ever since Goods and Services Tax (GST) was dont on 1
July earlier this year. As expected earlier, the all-powerful council agreed to
slash GST rates on restaurants bills from 18 percent to 5 percent. The move
on the back of findings that the restaurant sector was not forwarding the
benefits of the input tax credit (ITC)received to its consumers.
“All member felt that ITC to restaurants is not passesd on customers. GST
Wasbeing charged on existing rates. This was puttingadditionaltax burden
on restaurant goers. Thus we decided that restaurant industry will not get the
benefit of ITC. GST rates for all restaurants will be 5% from now on. Since
they did not pass on the ITC benefit to customers, they will not be eligible
for the benefit themselves. “Jaitley said addressing press personnel earlier
today.

From now on, GST will be levied at 5% from standalone restaurants


whereas, those combined with a hotel will cost the same. Only restaurants in
starred hotels, that is who charge a tariff of Rs.7,500 or above for their
rooms, will attract GST at 18%. Outdoor catering will continue to be
charged at 18 percent GST and will be eligible for input tax credit.

Meanwhile, restaurant Octor seems discontent with the decision The


government will be short-changed, said Rahul Singh, president of National
Restaurant Association of India.
LIMITATIONS

 The inherent weakness of primary source of data applies to this


research study only.
 The inadequate knowledge of the respondents about VAT policies,
procedures and methods likely to affect the of general public.
 The samples and the data collection are based on the willingness and
reactions of the respondents.
 The process administration of VAT is an ongoing process and the
inference and conclusions based on collected information may not
reflect the future course of action.
 As the reforms are continuous in nature, the findings of the study t the
right of evaluation of data may change from time to time.
 The GST Council had been constituted and a bunch of announcements
have been made by the Finance Minister.
 These are GST will apply when turnover of the business exceeds Rs
20 lakhs (limit is Rs.10 Lakhs for the North Eastern States) Earlier the
limit was Rs 10 lakhs and Rs.5 lakhs for NE states.)
 The increase in GST threshold limit will mean sigh of relief for
traders and service providers. Currently, the threshold of VAT is 5
lakhs in most states and 10 lakhs for service tax which will mean
more taxpayers will be exempt from GST.
 However, bad news for manufacturers because excise threshold is 1.5
crores which isreduced under GST to 20 lakhs Small manufacturers
with threshold more than 20 lakhs will have to register under GST.
FUTURE SCOPE OF THE STUDY

 The study was conducted to analyze the effectiveness of


implementing VAT.
 It covered the opinions of the professionals, traders, manufacturers
and the generalpublic, consumers It brought to be the beneficial
impacts of VAT.
 This study emphasizes the reason for transition from VAT to GST.
 This study was conducted with regard to the State of Puducherry
which includesKaraikal, Mahe regions.

Keeping in view a comprehensive indirect tax reforms m the country, an


announcement was made by the then Union Finance Minister in the Central
Budget (2007-08) to the effect that GST would be introduced with effect
from April 1, 2010 and that the Empowered committee of State Finance
Ministers, on his request, would work with the Central Government to
prepare a road map for introduction of GST in India. After this
announcement, the Empowered Committee of State Finance Ministers
decided to set up joint Working Group (May 10, 2007), with the then
Adviser to the Union Finance Minister and Member-Secretary of the
Empowered Committee as its Co-conveners and concerned four Joint
Secretaries of the Department of Revenue of Union Finance Ministry and all
Finance Secretaries of the States as its members.
This Joint Working Group got itsell divided into three Subgroups and had
several rounds of internal discussions as well as interaction with experts and
representatives of chambers of Commerce & Industry. On the basis of these
discussion and interaction, the Sub-Groups submitted their reports which
were then integrated and consolidated into the report of Joint Working
Group (November 19, 2007).
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THANK YOU.