The National Restaurant Association of India (NRAI) has raised concerns about new GST rules that require aggregators to pay taxes. New GST rules, which come into effect on January 1, require food delivery apps like Zomato and Swiggy to pay a 5% tax on the food services they provide.
The association says this will primarily affect unorganized players who might not otherwise have been fully GST compliant. “These players, who were earning less than Rs 20 lakh per year, did not file GST in the past and that will put them in the tax field,” NRAI said.
He stressed that the new standards will force them to change systems mid-practice. The NRAI said restaurants will continue to raise their own tax bills for on-site meals, take-out and deliveries.
Shah Miftaur Rahman, co-founder and CFO of WoW Momo, said there will be a change in the billing structure for orders placed through restaurant aggregators, and in-place and take-out meal orders will remain. the same for restaurants. âIf a pizza is billed on the spot and take out, there must be a tax on the bill. But if the delivery is made via aggregators, it will be calculated exclusive of tax. Rahman said delivery charges and packaging charges will remain the same.
Kabir Suri, chairman of the NRAI, said the government’s intention is to plug the GST leaks. “The government has realized that some restaurants or cloud kitchens operate primarily through restaurant aggregators, so it is best to give aggregators responsibility for the GST levied on that sale,” he said. he declares. “Since the sale is done through their portal, this will bring these restaurants within the scope of the tax.”
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The NRAI called the move boring for organized players who already comply with the law. âThis basically causes the unorganized players who use the portals to pay the GST. For the organized player, it is simply more compliance. Changing point-of-sale or billing systems will mean more manual work to reconcile internal operations and also with the third party, âSuri explained.
The association pointed out that the restaurant industry has an annual turnover of Rs 4 lakh crore and is the third player after retail and insurance in the service segment.