GST rollout: Small restaurants avoid online delivery

The Goods and Services Tax (GST) regime is about to become a reality by the end of this month and the e-commerce companies are also going to covered under this new tax rules. However, small restaurants and vendors have reservations about the same, so they are moving away from the online delivery start-ups.

Under the GST regime, whenever e-commerce companies pay to restaurants or vendors using their platform, they will need to deduct tax collected at source (TCS) of 2%. This might result in smaller restaurants with lower sales volume moving away from online platform.

Restaurants will have the facility to claim input tax credit and get a refund for the TCS under the new arrangement. But a part of their working capital will be blocked until the refund.

“For restaurants with less than Rs 75 lakh turnover... they are allowed a composition scheme which is a simplified form for GST and they will not have to do separate invoicing. But if you are online, there you cannot use this composition scheme,” said Pradeep Jain, FSSAI Chairperson of the Association of Indian Hotels and Restaurants (AHAR).

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