Restaurants look up to the government to reintroduce ITC

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Under the new Goods and service tax, the government has set many restrictions on restaurants for availing input credit tax (ITC). If a restaurant wants to avail of input credit tax, it must fulfil the council’s eligibility criteria. As a result, very few restaurants can legally claim input credit tax. For the rest of the industry, that sums up almost 95% of the ITC are removed as they don’t come under the criteria mentioned. 

Input credit taxes have always served as a backbone for the food industry of developing countries like India. It helped the restaurant cover many costs like delay in payment, damage of stock, infrastructure costs etc. 

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The restaurant industry was among the most affected industries in the pandemic. About 30% of restaurants were shut down permanently. It employs 70% of the population. The sub-sectors, such as technology, operation, human resource, raw material, agriculture, architecture and land, are also suffering. As a result, about 2.5 million people were faced with unemployment. The overall market size and the profit of this contracted almost to its half. The industry is looking upon the government to reintroduce Input credit taxes to ensure its survival.

Leading personalities of the restaurant industry like Rahul Singh and Zarowar Kalra convey to the media that they expect input credit taxes to be reintroduced in the Indian food industry; otherwise, it may collapse down. 

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Sukhija, a founder of popular brands like Lord of the drink, cafe JLWA, diablo and the flying saucer cafe, says that the industry has undergone huge loss in a pandemic. Therefore, if the country’s food wants to stand out from the competition in the global market, it must retain input credit taxes. 

Miten Shah, the partner at The studs sports bar and grill, had concluded that only profit earning capability has decreased, but also the food industry, which provides employment opportunities in massive numbers, is also hampered by the restrictions laid on input credit taxes. 

The founder of cloud kitchen requested updating or reviewing the GST scheme as many new startups are coming up with unique operating ideas that are not even considered in the GST policy.

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