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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:

“ABHISHEK ANIL THAKUR”

ROLL NO. 701

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 On
Impact of GST on Restaurants’’ in a better way.

I would also like to thank our coordinator 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.
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.
Executive Summary

 Introduction of Project

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

Introduction
“Athithi devo bhavha” (Guest is God) has been one of central tenets of Indian culture since times
immemorial. Today, hospitality sector (which includes tourism also) is one of the fastest growing
sectors in India and is expected to grow at the rate of 8 % between 2007 and 2016. The boom in
travel and tourism has led to the further development of hospitality industry. Consequently the
hospitality industry is expanding globally and promoting its growth in a changing multicultural
environment. Hotels contribute the output of goods and related services which build well being of
their nations and communities.
Goods and Services Tax (GST) as a tax reform
Migrating to Goods and Services Tax (GST) is a time to revinict the taxation and
remove the anomalies. Hotel industry (includes tourism) contributes to 6.23
percent to the National GDP and 8.78 percent of the total employment in the
country.
Goods and Service Tax (GST) is a destination based consumption tax which is a levy of tax on all
goods and services with the objective of expanding the tax base through wide coverage of
economic activities , mitigating the cascading effect , reduction of exemptions , enable better
compliances etc. thereby resulting into formation of common national market for goods and
services .
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 economy advisory panel which included three former RBI
governor IG Patel, Bimal Jalan and C Rangarajan Vajpayee set up a committee
headed by 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
Vajpayee government 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 committee Dasgupta
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,
thereby ensuring 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 lakhs 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.


There are 4 kinds of restaurants:

1) Any business with less than 20 lakhs annual revenues need not even register
under GST nor do they need to pay anything under GST. So most small roadside
eateries are fully exempt from GST.

2) Small restaurants with annual turnover less than 75 lakhs. Note that if a small
restaurant has 2 branches under the same legal name with the same GST number,
the total revenues of both the restaurants are taken into account to determine the
75 lakhs limit.
Such restaurants with annual revenues less than 75 lakhs can register under GST
under the composition scheme and the applicable rate of GST is 5%. Like in the
earlier composition scheme under VAT, the restaurant cannot charge the 5% to
customers. i.e. If an item is priced at Rs.200, the customer can be charged only
Rs.200. 5% of Rs.200 is then payable by the restaurant as GST.

3) Restaurants without air-conditioning - the rules state that the restaurant should
not have AC in any part of the premises. So restaurants with a non-AC section and
AC section will still have to charge 18% GST. In practice some restaurants are
charging 12% GST for the non-AC section and 18% GST for the AC section, if the
AC section in a separate floor with a separate entrance. This seems to be incorrect
as per the definition as the GST number is the same for the AC and the non-AC
restaurant in the same premises.

4) Restaurants with air-conditioning (in any part of the restaurant) need to charge
18% on all bills for food prepared in the kitchen. The 18% rate is applicable for
dine-in, take-away, delivery and even party orders from the restaurant. If the AC
restaurant also sells pre-packaged food, such as Namkeens (e.g. Packed Chips in
a Halidrams or Adyar Ananda Bhavan), the GST applicable on these items will be
12%.
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
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 2

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 managed it in a systematic way for convenience
reference.
2. Secondly I have collected data by interviewing the manager, getting his views and
asking him subjective type questions and have prepared on the basis of the
objectives of my project.
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.

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.

Scope
The survey of the project was done by interviewing Mr. Dayanand Tandel
owner of Restaurant Ram-Ratan Shamiyana,Uran.

CHAPTER 3
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.

CHAPTER 4

Data Analysis

PRIMARY DATA

We collected information from the subjects by means of subjective questions.


SAMPLE DESIGN-

Sampling Unit: Subjective questions

Sampling technique: Interview

Sampling area: Uran

ANNEXURE

Questionnaires
1. Do you think implementation of GST has caused a higher price of GST?

 Yes, most of the services have become marginally expensive. These


Services were earlier taxed 15% and now most of the services are raised up to 18%.
To this extent your services cost more by 3%

2. How has GST affected your customer base?

 The GST has not affected to that extent as such .The profit of the restaurant
depends on people visiting and that relies on the quality of the food that restaurant
provides. Customers come due to quality of the food and its good will.

3. What is the process of GST filing?

 The process of GST filing requires some authorized proofs which includes
documents, Proof of registration of restaurant, Evidence of principle place of the
restaurant , Bank documents etc.

4. Do you find GST more beneficial than older tax system?

 GST is very clearly beneficial than the older tax system as it has reduced rate and
made process easier.

5. What are the negative impacts of GST on your restaurant?

 There is no major negative impact of GST but there is a need to invest a more
amount of time to understand the new process.

6. How has GST affected the aggregate turnover ?

 The aggregate turnover is not affected at the larger scale , so I can say that it is
probably the same.

7. Based on GST implementation , what will be its effects on the long term growth
of restaurants ?

 I would prefer saying that GST can help the long term growth of the restaurant in
my opinion.

8. What major difference did GST made to you and your restaurants?
 GST looked like a problem in the beginning as we had to change and adopt as per
the new tax system but now it has made tax process a lot easier.

FINDINGS AND RECOMMENDATION


After implementation of Goods and Service Tax the tax rate of most of the services have
been risen up by 3%. The customers come to the restaurants on the goodwill of the
restaurants, and not due to change in the tax system. Various documents are required for
filing GST. GST is more beneficial than the older tax system. There is no negative impacts
just takes time to adapt new tax system. Aggregate turnover is not affected much in large
scale business. GST looked like a problem in the beginning but it will be helpful in future.

CHAPTER 5
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 18 GST rate and the Non-AC restaurants will be charged 12 and a 5GST will be
charged from small hotels, dhabas and restaurants that 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.

CHAPTER 6
BIBLIOGRAPHY

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https www.google.co.in/amp/sim.cconomietimes.com.andustry/sqviceshot
el restaurants eating outlet cheaper orall-resturants has been
Tikedal 5 percent am cardioloshow O SUSS
If you visit a restaurant or a cafe now that the Goods and Services Tax (GST) has been rolled out, the break
up of your bill will look different than it used to before GST.

GST, which has come into effect from July 1, 2017, has subsumed 17 indirect taxes and 22 cesses which
were at different rates across different states.

Earlier a normal restaurant bill used to show a plethora of taxes which were charged by the state (VAT/sales
tax) and the central government (Service tax) in ..

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