The much-awaited Union Budget 2017 was announced by Finance Minister Arun Jaitley on 1st February 2017. While the entire Restaurant Industry had high hopes from the new budget, (having gone through a tumult with Demonetization striking the business hard, and further chaos ensuing with the announcement of Service Charge becoming optional) the Budget fell exceedingly short of expectations.
Impact of the Budget 2017 on the Restaurant Industry
Several restaurant veterans had expressed hopes of a faster implementation of GST and a reduction in the overall Service Tax. However, the Budget released by the Finance Minister discussed invariably nothing that would marginally impact the Restaurant Business.
Though the Budget does not seem to have a direct impact on the FoodService sector, the tax relaxation given to those earning between Rs 2.5 lakh to Rs 5 lakh is likely to affect consumer spending, as the disposable income of the Middle-Class consumers will take a hike. An increase in consumer spending spells positive news and would hopefully increase the size of the Restaurant Customer Base. This, however, invites debates, as a more significant propagator would have been a reduction in the Service Tax. A cut in the Service Tax would have surely increased footfalls at restaurants, but, unfortunately, the Union Budget has not affected the taxes levied at restaurants.
The only ray of hope seems to be the implementation of the GST, that would significantly influence the restaurants and the consumers alike. Including the VAT and the Service Tax, customers are already paying up to 25% of the total bill currently. After the implementation of GST, the overall tax is expected to come down to 18%.