Budget 2024: NRAI writes to Finance Minister demanding reforms in restaurant industry

Budget 2024: Ahead of the Budget, the National Restuarant Association of India (NRAI) has called for key reforms in the restaurant industry. The association is aiming at a comprehensive overhaul of the sector.

NRAI's proposal

NRAI in a letter to Finance Minister Nirmala Sitharaman has proposed the reinstatement of input tax credit for Goods and Service Tax (GST). Input tax credit is the GST paid by a registered person on the purchase of goods or services that are used for the furtherance of business.

The association has argued that this would help restaurants that are currently operating under 5% GST without the benefits of input tax credit. In order to balance it out, the association has suggested increasing the GST rate to 12%. The association believes that this would streamline compliance and enhance profitability, particularly for smaller enterprises.

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"…While restaurants below a certain revenue threshold can continue with the current GST provisions, the organised sector with higher revenues and capex outlay may move towards the proposed GST regime," Kabir Suri, president of the association and co-founder and director of Azure Hospitality Pvt Ltd, which runs the popular Mamagoto chain of restaurants told Mint.

The association has also proposed setting up of a dedicated food services ministry or department. As per the association a separate department is required as the industry contributes approximately Rs 4.23 trillion annually. It said that a separate body would streamline the currently fragmented regulatory framework, simplifying compliance and fostering growth.

As per Mint the other demands put forth by the association includes, "industry status" for the sector to access easier financing and subsidies, the formulation of a balanced e-commerce policy to protect restaurants from unfair competition, and addressing operational challenges like the reduction of GST on commercial rentals and the simplification of licensing processes.

Furthermore, it has also advocated for extended business hours, which it believes will accelerate India's progress towards becoming a $5 trillion economy. It also called for targeted subsidy schemes and easier access to debt financing for SMEs, particularly in smaller towns and cities.