The restaurant sector in India is on constant growth and is now impacted with GST – Goods and service tax. Hence, we thought of giving you a detailed impact analysis about GST on restaurant industry. If we look at the present statistics of the restaurant industry, as per Indian Food Service Report 2016 it is estimated to be worth 3.09 Lakh Crore. The report also stated that the food market of the country has directly employed more than 5.8 million in 2016
GST EFFECT ON RESTAURANT
The smaller business like food courts, dhabas, coffee bars cater to large segments of population on daily basis. The most people who are in this business category earn modest income and thus the new tax scheme is likely to come under criticism. All types of hotels whether it is AC or non-AC will surely collect the higher rate and this will bring an overall price hike in food items.
Based on the new GST update budget, hotels that are charging Rs 1000 per day for rooms are exempted from taxes. Hotels that are charging Rs 5000 or more room tariff per day will have to pay 28 per cent GST which is a big threat to country’s developing tourism and hospitality. Restaurants in such hotels also, will to pay 28 per cent GST.
In the current tax scheme , restaurant business owners have no option to adjust the output service tax burden with the credit of input VAT on goods consumed, so restaurant owners are encouraging for the GST bill.
GST is a integrated scheme of collecting central and state taxes together. there are three types of taxes – Central GST and State GST and IGST (Integrated GST) for interstate transactions.
Since every the center and state taxes are combined and made as one tax under GST, state governments and central government will need to have their share of GST. Hence, there will be three types of taxes under GST. Since GST is a consumption-based tax, the tax revenue will be charged and collected by the consuming state. This helps the consuming state to secure their tax base.
If the goods are transferred within state i.e., the consumption state is same as origin state, there will be CGST (Central Government Tax) and SGST (State Government Levy)
When transfering goods from one state to the other, IGST will be charged and the central government will settle the tax to the consuming state.
What is Invoice/Bill?
It’s a document either online or in paper format in which details of supplier/ purchaser are incorporated like Name of the Sales/ purchaser, registration no. As well as in bill details of sales or purchases like name of Item, Quantity, Tax rate, tax amount should be present. there are some general formats instead of particular format for invoices.
Goods and Services Tax Invoice
GST invoice is which are given or taken by the individual who hold GSTIN (Goods and Service Tax Identification No). In these bill an individual should mention the rate of tax and the amount as well as there should be bifurcation on interstate and intrastate sales/purchases.
GST Sales Invoice
The invoice which are issued by the individual to their purchaser. Generally in these bills there are already pre-printed company name and their GSTIN No. in these invoices there are an invoice bill no. that should be in a sequence. These invoice no. can be in any format as per the wish of the assessee. The invoice should be issued with date of sales. Then there will be details of seller and the commodity details amount of sales and tax amount.
The necessary Fields to be in Your GST Sales Invoice
All the fields must be properly filled with correct entries. Some of the necessary fields are bill number and date, name of customer, delivery address, Customer and taxpayer’s GSTIN, Place of supply, HSN code. All the fields are important for the future references and should be taken note of while generating the invoice.
Invoice Date and Due Date should be Properly Entered
It is suggested, not to make mistakes while filling invoice date and due dates as the difference is that the invoice date is preparation date of the invoice while the due date is concerned with the payment of the invoice due. So, be aware of the difference between both the dates and take precaution.
Maintain the Invoice Serial Number
It is must to maintain the bill serial number as for the future reference in case a taxpayer wishes to change the invoice format, he can inform the tax department along with the invoice serial number. UnavuPOS GST feature provides the all mandatory fields required for new gst invoice regime including inventory, accounts.
Before starting for business, small retailers can choose from a point of sale and retail management software. However,their experience is limited, depending on cost and popularity typically influence their choices. It’s okay to know as they go, but they will not have the competitive part needed in this global economy.
Change Is Good
The economy has converted drastically in the past ten years. Small businesses are competing with big companies located throughout the world. They need to adapt and evolve with these changes or lose market share, revenue, and profits. One of the ways they can compete is through building efficiency.
These problems intimates a need for change. Here are ways you have know when it’s time to replacing your retail software with something better.
Problems with Inventory
Inventory is the major of your business. It’s also where most of your money is tied up. Inventory is the basic way any retail business can increase profit . With a steady balance sheet, more products can be purchased, which leads to a profitable growth. Any problems with your inventory will lead to poor customer service and loss of profits.On tracking inventory on a spread sheet, then it’s time to get a retail software solution that scans it into the system and automatically generates purchase orders when stock is low. Most retail and point of sale software are designed to report inventory levels. These reports keep you from physically counting products on the shelves. This allows you to optimize your inventory, making slight adjustments along the way to respond to your customer’s needs.
Poor Customer Experience
The loss of one customer is more than a loss in profit. Replacing that customer can cost you five times more to acquire a new one than the cost of retaining an existing one. Repeat customers also offer friendly and free advice on what products to carry and how to improve the experience—providing invaluable feedback.
Reports and Analytics
Reports generated from your retail software must help you scan every aspect of your business. The sales history helps maximize your business efficiencies, while eliminate areas of waste, If your system can only give a handful of sales reports, then it’s time for a change.
The benefits of replacing your traditional point of sale and retail management software outweigh the perceived hassle of changing systems. An increase in sales, inventory management, and employee productivity will pay for the system within a very short period of time. UnavuPOS system helps you with advance technology to make you more revenue.
Many states in India currently have their own systems for differentiating goods for tax rate determination. therefore, with the coming Goods and Services Tax (GST) scheme, there’s a desire for more uniform classification – not just on the national level but internationally. so, the HSN for goods and SAC system for services. In this we’ll focus on HSN codes as they relate to GST.
What are HSN codes
the World Customs Organization (WCO) created the Harmonized Commodity Description and Coding System is a multipurpose international product nomenclature.
WCO has three-quarters of which are developing countries that are responsible for maintaining more than 98 percent of world trade. HSN standardizes the differentiation of merchandise under sections, chapters, headings, and subheadings. This projects in a six-digit code for a products(two digits each representing the chapter, heading, and subheading).
India, a member of WCO has been using HSN codes since 1986 to differentiate commodities for Customs and Central Excise. To make the codes more explicit, Customs and Central Excise added two more digits resulting in an eight-digit classification.
Who are they for?
In Goods and service regime the dealers will have to use two, four, or eight-digit HSN codes for their products , depending on their turnover the year prior.
Dealers with annual gain of less than Rs 1.5 crores will not need to go with HSN codes for their commodities, Between Rs 1.5 crores and Rs 5 crores have be required to use two-digit HSN codes for their products or services. For Rs 5 crores and above have be required to use four-digit HSN codes for their products For imports/exports, Eight digits HSN code has been compulsory, as GST has to be compatible with international standards and practices.
India’s move to GST come moves to an online taxation system and along with to HSN codes for differentiation of goods for taxation. It’s all developed to bring about single taxation and ease of doing business. HSN codes will now be used in filing returns, on invoices, etc., rather than written descriptions. UnavuPOS provides the best GST software for a safe and secure invoicing for importing and exporting commodities.
Goods & Services Tax (GST) is a direct approach to an indirect tax scheme. The “One Nation One tax” brings several state collected taxes like the (VAT)value-added tax, entertainment tax, sales tax, cess, excise tax, purchase tax etc. The two sections of the GST will be the Central GST (CGST) and the State GST (SGST). Finance minister says that this change will bring a uniform market across the country & boost growth rates.
With present multiple taxes being levied, cost of dining out is expected to reduce by 2 – 4 %. GST will be a boon to business owners as tax will be collected on consumption other than production. Inventory & raw materials can be obtained at subsidized rates from agriculturists and farmers as taxes remain same across states. Thus, reducing the overall cost substantially & making the restaurant business manageable. Although, GST paid at 18% is higher than the current rates, the final cost to consumer decreases. Consumers will be happy to see one tax without having to scan across calculating multiple taxes & GST may come down to 18% of the total value of the bill.
Detailed Tax Rates for Restaurants.
Finance minister declared that depending on turnover & the type of service provided, tax is divided for Restaurants like:
- AC restaurants & those with liquor license will be levied 18% tax
- Non-AC restaurants will be charged 12% tax
- Restaurants with a annual profit of less than 50 lakhs will be charged 5%
- Fine-Dine restaurants will impose a 28% tax
The overall cost of the food & restaurant industry is likely to decrease under the new GST regime. A single tax bill saves up to 10-15 % on the total bill.
All transactions will be reported & expenses will be recorded, Restaurateurs will increase transparency in business & increase profits over the long run.
Government provides complete support in implementing the new levied tax structure & assist in claiming the VAT returns as well. This change will also encourage every SMB in the Food & Restaurant industry to hop on to the online brand wagon & move up towards digitization.
GST plans to reject cascading effect of tax. All inputs credits can be utilized and it will bring down the tax burden on account of usage of credit. The credit can be claimed only after it matches the invoice of the respective suppliers.In the current tax regime, tax credit claims under various tax laws are not allowed. For eg: tax credit on account of taxes paid under excise duty cannot be claimed against service tax dues and vice versa.
therefore, it remains to be seen whether the GST will bring in a change in the Food & Restaurant industry. The Restaurateurs or Suppliers & even Consumers can rejoice over the fact that it is about to bring some difference
Figure out the technical aspects from the point of GST execution and how ERPs will have to realign with Goods and Services Tax law . Here we tell you about the impact on ERP systems, technological readiness you must do for being GST compliant.
We are at the brink of one of the biggest business changes of our times viz. Goods and Services Tax. So far, most of the big businesses have already identified vendors for implementation of GST software. Many of the large enterprises had floated a Request for Proposal/Request for Information (RFP/RFI) late last year, asking software providers to present them with their solutions. They would have then evaluated these providers, over multiple product demos and extensive question and answer rounds, to reach a stage where they can now begin the implementation process, and undertake business process mapping and solution’s.
If you need a GST software, then here are the few main features that our software provides.
Cloud based GST Software
UnavuPOS GST is a cloud based software i.e. developed and maintained on internet which empowers us to provide our users with the following features
- Create a sync between working offline and backup on connectivity with internet
- Providing an updated version of our software without bothering the user with additional efforts to update the software
- Easy access to software from anywhere at any time without worrying about internet connectivity
Access live reports anywhere
As the software is hosted on cloud, user need not have a desktop system for viewing live reports it may be a tablet or a smart phone can be used of our software. UnavuPOS GST software can be downloaded as an offline software on system, mobile app, mobile website or desktop website. User need not bear additional cost of installation of the software and utilities. Hence, You can login from anywhere and anytime.
Integration of accounts
In a situation where user is dealing with multiple clients or businesses along with their voluminous data, our software makes it easy for them to:
- Bulk import of such data through excel or templates
- Features like filter and bulk selection makes it work friendly
Validation while invoicing
Post GST rollout, user will have to create invoices having more than 20 fields such as HSN code, GSTIN of supplier etc., and these invoices need to be uploaded on the GSTN portal on monthly basis.
On creating an invoice our software makes sure that all required fields are perfectly filled. In case of any fault, an alert will be given for every error made in an invoice along with report of all such invoices. Hence, user will be able to keep a track of major dates and actions to be taken accordingly
Goods and Services Tax applied on the acquisition of goods and services can be set off against that payable on the supply of goods or services. The producer or wholesaler or retailer will pay the applicable Goods and Services Tax rate but will claim back through tax credit scheme. On being the end customer in the supply chain, the end consumer has to withstand this tax and so, in many aspects, GST is like a last-point retail tax. This tax is been collected at point of Sale.
Supply Chain of GST with Example
The present tax structure does not let a business person to accepts tax credits.This may set to change with the implementation of GST. This system will have two components which will be known as
- Central Goods and Service Tax(CGST)
- State Goods and Service Tax(SGST).
The current taxes like Excise duties, service tax, custom duty etc will be merged under CGST. The taxes like sales, entertainment, VAT and other state taxes will be included in SGST.
GST will be collected on the place of consumption of Goods and services.
It can be levied on
- Intra-state supply and consumption of goods and services.
- Inter-state movement of goods.
- Import of Goods and Services.
Benefits of Goods and Services Tax
- The tax system will be made transparent and simple.
- The whole Indian market will be a unified market which may convert into lower business costs. It can promote smooth movement of goods across states and minimize the transport costs of businesses.
- It is best for export oriented businesses because it is not applied for goods which are transferred out of India.
- In the long run, the lower tax burden could translate into lower prices on goods for consumers.
- It can bring more transparency and better compliance.
- minimize in number of departments which in turn may lead to less corruption
- More business entities will come under the tax system thus widening the tax base. This may lead to better and more tax revenue collections.
- Companies which are under unorganized sector will come under tax regime.
Challenges for implementing GST
- To execute the bill there is to be lot changes at administration level, Information Technology integration has to happen, sound IT infrastructure is needed, the state governments has to be compensated for the loss of revenues.
- Goods and Services Tax, being a consumption-based tax, states with higher consumption of goods and services will have better revenues. So, the co-operation from state governments would be one of the key factors for the successful implementation of this.
- As GSTreplaces many cascading taxes, the common man may benefit after executing it.
Goods and Services Tax is an indirect tax that will be levied on goods as well as services. All the existing state and central indirect taxes will be subsumed under these apart from Customs Duties. It will be applicable in throughout the country. Under GST regime , every product will be taxed at the same price in every place of where tax is same as in Himachal Pradesh as well as Tamil Nadu thus we also refer GST as ONE NATION ONE TAX.It does not mean that every product will be charged at the same price as we cannot fix the same price for AC and food powder. Apparently, the essential will be collected at a lower rate than the affluence, but a single luxury product or an individual essential product will be charged the same rate throughout the country.
How GST works?
GST will be divided into three components the Central Goods and Services Tax(CGST), State Goods and Services Tax(SGST), Inter State GST. The CSGT will combine the Central indirect taxes like the service tax, excise duty, additional customs duty, additional special excise duty whereas SGST will integrate all the State indirect taxes like VAT, entertainment tax, octroi and others. The CGST is been collected by the Central Govt whereas the SGST is collected by the state government. In the case of an sales transactions within the states, IGST will be collected by the Central Government. GST will allow the Input tax credit for the taxes paid on the purchase of goods and services during a commercial activity and input tax credit of CGST and SGST will be provided by the respective governments.
How will GST effect the country?
GST bill envelope the Goods and Services Tax and can be the great indirect tax reform providing a uniform and simplified way of Indirect taxation in India. Once introduced it will replace and combine all the number of other taxes like VAT,CST, Service tax, CAD, SAD, Excise, Entry tax, purchase tax etc. The common idea for implementing GST is making India into a single market. This may have a better impact on GDP of India and help to boost the Indian economy.
Main Benefits of GST
- A unified indirect tax system.
- decreasing in manufacturing cost.
- It integrates a number of other taxes like VAT, CST, Service tax, CAD,SAD, Excise, Entry tax, purchase tax etc.
- minimized complex tax system.
Positive effect of GST
- A single tax scheme eliminating a bunch of indirect taxes.
- Less tax compliance.
- eliminates cascading effect of taxes.
- making costs shall be minimized, therefore prices of consumer goods likely to come down.
- Due to reduced costs some products like cars, FMCG etc. will become cheaper.
- minimize prices will improve consumption. improvement in demand will lead to increase supply. Hence, rise in production of goods. Maximizing production will lead to more job opportunities in the long run.
Hence, this is possible only if the benefit is actually passed on to the consumers. There are exceptional factors also like the merchant profit index that determine the final price of products.GST alone cannot estimate the final price of goods.Use Unavu GST feature to make your business profitable
The Goods and Services Tax is a valid step towards indirect tax reforms, that will combine a large number of Central and State taxes into one tax and prevent double taxation to pave the way for common national market. GST will reduce the overall tax burden of goods on the consumers from the current 25% to 30% to around 17% to 19%. Thus, it would reduce the cost of products for the end user.
An invoice is the primary document used to assess the collection of any tax related to the transfer of goods or services. Under the new Goods and Services Tax (GST) scheme, government is implementing a new, comprehensive invoicing format that should facilitate the computation of taxes on invoiced goods or services.
There will be two types of invoices in the new tax scheme: a tax invoice and a bill of supply.
When supplying taxable goods or services a registered supplier should issue a tax invoice. Specific rules regarding the use and contents of the invoice apply:
- Bill number of the invoice
- State name and code
- GSTIN/unique ID
- HSN code/accounting code
Bill of supply
A registered supplier will issue a bill of supply when:
- The goods or services supplied are cleared
- The supplier opts to pay taxes under combination Scheme
As per the rules governing the bill of supply:
- Serial number
- Details of receiver
- Particulars of goods
- If the value of the goods or services supplied is less than Rs. 100, there is no need to issue a bill of supply. Instead, the authorized person must generate a stabilized bill of supply for any such supplies transferred during the day.
Benefits of GST
Increase tax levy and improve India’s economic development by breaking tax barriers between States and combining India through a uniform tax rate. It is calculated that India can profit to $15 billion a year by implementing the Goods and Services Tax.
The taxation burden will be splitting equally as between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions.
It will build a transparent and corruption-free tax administration, by simplifying procedures of taxations and reducing the tax burden, though increasing the ambit of taxation.
Since, both Centre and State GST will be collected at the place of sale of a product, it will be charged on the manufacturing cost only, and hence, the cost of the product will come down. Lower price (approximately 5%-7% for consumer goods) will attract more consumption and thereby help both the manufacturer and the consumer.
Signing the invoice
The authorized representative of the registered person is need to sign the invoice either physically or digitally via Digital Signature Certificate.
Every invoices must support to the rules framed under GST India to avoid amends for non-compliance. Proper invoicing should enable the administration of the successful digital compliance under GST scheme.
UnavuPOS is an application service provider partnering with licensed GST Suvidha Providers. To understand how UnavuPOS GST can help you with GST compliance, contact us through
The Impact in Restaurant Sector With the passing of the Goods and Services Tax Bill, the nation’s Food and Beverage Industry has been left both flustered and fluttered. As because of indirect tax, this affects both the manufacturer and the customer. The impact of GST on Restaurant Industry is effectively seen in both categories– those who are working as restaurateurs (restaurant owners, businessmen, investors) as well as those that form part of the clientele (consumers ranging from cafe hoppers to fine diners).
With the GST coming into force, several state collected taxes like the value-added tax, entertainment tax, sales tax, service tax, purchase tax etc. have all been combined into a single transparent tax.
Benefits expected due to levy of GST on Restaurant Industry
- Restaurants and hotels may increase their overall service as a single tax will be processed at checkout.
- Finally consumers are free from having to calculate various taxes on the final bill.
- the payment system is going to be more effective and faster, with a single tax under GST for restaurants
- Overall, trading on several commodities that was not regulated earlier has become more structured, for example, oilseeds, pulses and cereals have been put under the light of a structured tax, and therefore can be accessed better in terms of both manufacture and consumption.
But are you aware that the GST could be a good thing?
- Instead of scanning several rates of taxes and duties, a customer can save a small percentage every time he eats out because of a standard value charged (under the current tax regime this value could come down to 18% on the total value of the bill).
- As a consumer, the GST on restaurant meals has made dining out more pocket-friendly with a single clear 18% charge as opposed to the earlier multiple 20-24% charges that were cumulatively levied.
Makes Better Days for Business Owners?
As an owner of a restaurant business, one may be argue with the several taxes from the purchase of raw materials right till selling the final product to the consumer. How does the GST on Restaurant Industry affect this target market.Raw materials can be procured at finance rates from agriculturists and farmers at a single stroke instead of owners having to negotiate – taxes shall remain uniform throughout states thus making the competition balanced. The overall cost of procuring goods will thus decrease substantially, Using UnavuPOS GST Feature makes the restaurant business a viable and easily manageable.