Restaurant Franchise Opportunities

Supply Chain Mar, 09 2017

How GST will help food biz grow in India

FMCG industry which is one of the major contributors in overall GDP is going to be the topmost industry being benefited from GST.

By Pallavi Singhal
Feature Writer

Taxes may feel like a never ending maze to most of you. But in general people are not aware of the direct and indirect taxes they pay for while buying a product or a service. And thus, GST is being introduced so that the tax regime stays same for every state of our nation and the consumers get a superior idea of how much they have to pay. The bill is sure to bring transparency and make this ‘one country-one tax’ system. Citing some of the benefits that GST holds some of the leaders spoke on how it is going to help the smooth run of the business.

Single Market: FMCG industry which is one of the major contributors in overall GDP is going to be the topmost industry being benefited from GST. Till now the country has been known as a land of miss managed and unorganised supply network and with GST being implemented the traders can now buy raw material from any part of the country as the tax inflicted would be same overall, thus reducing the latent costs of long transportation. It would make doing business tax neutral in the country, irrespective of the place.“The implementation of GST will positively impact the FMCG industry, which is on a growth trajectory. The sector is sure to avail significant benefits in transport, logistics and warehousing apart from other input costs, “shares Oliver Mirza, Managing Director & CEO, Dr. Oetker India.

Cutting the cost: Edible oil, tea, coffee and spices which are currently taxed 3% - 9% will be dropped to 5% while goods taxed at 9 – 15% at present will be taxed at 12%. Items that presently fall in the 15-21 percent range will drop to 18%, thus affecting the overall food cost. The proposed rate is lesser than the current tax rates with items such as food grains taxed at 5% as opposed to the current 6%, and processed food charged at 12% as opposed to the current 15%.GST regime will definitely make doing business easier and reduce paper work for hotels, but taxes should be capped at 10%,” adds Bharat Malkani, president, Hotel and Restaurant Association of Western India (HRAWI).

Ease on bills: The GST bill is one step closer to advocating for reduction and simplification of doing business. The removal of multiple taxes is sure to make the restaurant bills lighter. Cheaper bills are sure to attract customers and will result in heavier traffic in restaurant.

Hence, we can say that in long run GST is going to help restaurant and food business with an ease unfolding new avenues and opportunities. 

Related: Multi Cuisine Food to set new heights in 2017

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