NRAI Urges Government for Restoration of ITC in Budget 2024
In a significant appeal to the government ahead of Union Budget 2024, the National Restaurant Association of India (NRAI) has called for the reinstatement of input tax credit (ITC) for restaurants. The industry body recommends an increase in the current 5% GST rate to 12%, highlighting the crucial need for fair e-commerce policies and balanced regulations.
Addressing Finance Minister Nirmala Sitharaman in a letter, NRAI emphasized the importance of fostering a level playing field that allows platforms to innovate while safeguarding the interests of restaurants, delivery partners, and consumers from potential exploitative practices.
The restaurant industry, which faced severe challenges during the pandemic, has shown resilience in its recovery. According to NRAI, specific policy and budgetary support in the upcoming Budget could accelerate the growth trajectory of the sector.
The absence of ITC not only impacts the operating margins for businesses but also significantly increases the capital budget required for new projects. NRAI proposes the restoration of ITC for restaurants along with a simultaneous increase in the GST rate to 12%. To address concerns for smaller businesses, the adjustment could be implemented based on revenue slabs.
Kabir Suri, President of NRAI, highlighted the immense growth potential in India’s food services industry, stressing that government policies, including fair treatment in GST input tax credit, rationalized licensing norms, and a well-structured e-commerce policy, would benefit businesses, consumers, and contribute to overall economic growth and employment opportunities.
NRAI expressed concerns about fair competition and balanced growth in online platforms and requested the conferment of “industry status” upon the food services sector. This designation is expected to provide advantages under central or state industrial policies, facilitating access to finance, special schemes, subsidies, and expedited clearance processes.
The industry body called for the rationalization of licenses and No Objection Certificates (NOCs), citing operational complexities and compliance burdens. NRAI appealed for specialized subsidy programs and facilitated access to debt financing for Small and Medium Enterprises (SMEs), including subsidies on essential ingredients, utilities, and waste management to alleviate operational costs, particularly for struggling restaurants in smaller towns and cities.
Additionally, NRAI urged the government to consider extending working hours for the restaurant sector and reducing the Goods and Services Tax (GST) on materials used for home delivery, emphasizing the positive impact on the industry’s growth and economic contribution.
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