The National Restaurant Association of India has raised the issue of the lack of input tax credit for the restaurant industry with the Union finance ministry.

Restaurant services attract 5 per cent GST without input tax credit. The industry is in favour of an optional structure that allows collection of input tax credit, at a higher rate of 12 per cent, along with the current structure.

“We don’t get GST input tax credit. We have written to the finance ministry. There is a budget coming up. For the next six months we are meeting all the finance ministers across states and we are also meeting the finance minister of Bengal very soon. I am hopeful that the GST Rate Rationalisation Committee will look into this,” said Sagar Daryani, CEO and co-founder, Wow! Momo Foods, and vice-president of NRAI.

“Without GST input tax credit, we are getting a situation of double taxation. For example, when we are paying rent, we are paying GST at 18 per cent and then we are collecting 5 per cent from the consumers and paying the government,” he said.

According to restaurant operators, this gains importance as main street rentals have appreciated across major cities, including Calcutta.

The restaurant industry is valued at ₹5.69 lakh crore and contributes to 1.9 per cent of India’s GDP. According to the NRAI, this is estimated to grow to ₹7.76 lakh crore by 2028. The tax contribution of the industry was ₹33,809 crore in 2024 and is estimated to reach ₹55,594 crore by 2028.

State excise

NRAI members are expected to meet Bengal excise officials to discuss a set of issues ranging from allowing restaurants and standalone outlets to serve liquor on dry days, heft label registration fees, higher duties on craft and draught beer among others.

“We are hopeful of a meeting with the excise department officials in August,” said Abhimanyu Maheshwari, founder and CEO, Zing Restaurants, and NRAI Calcutta chapter head.

“If this industry has to thrive, it has to be food and beverage both,” Daryani said. At present registration fees for liquor labels nationally varies from ₹1500 to ₹15,000. In Calcutta it is at ₹50,000 per label per year. The association has sought for a reduction. The duty on draught beer has increased from ₹12 to ₹200 over the last two years and the association has sought a review. 5-star hotels are currently exempt from dry day rules and the association has called for a parity by allowing standalone bars to serve liquor on dry days.

The association has also called for all listed brands to be made available at Bevco warehouses to avoid a shortage of stocks at the retail level.