Stalwarts urge for reduction in GST on food & hospitality sector in Budget 2021

In FY20-21, the Covid-19 pandemic adversely impacted the economic performance of the country with the GDP seeing a stark dip on the back of wary consumer spending sentiments and the government’s lockdown measures that rocked the traditional functioning of many industries. Hoping for a steady and quicker recovery moving forward, the country has its eyes on the Budget 2021-22 to be announced on February 1, 2021 to discern whether it is a populist one or not. Hospitality stalwarts share their views about last year and their expectation for the next year, ahead of FM Nirmala Sitharaman unveiling the budget for the upcoming fiscal.

Tarak Bhattacharya, CEO, Mad Over Donuts notes, “The year 2020 has been one of the most difficult and challenging for every business industry. The pandemic and the impact of the nationwide lockdown have had a disastrous impact on the country’s food and hospitality industry. However, with the budget 2021, we are hoping to get adequate support and relief from the government to boost the F&B industry. The government should take fiscal measures to relax taxation, reduce GST and other direct taxes. We are expecting the Union Budget to provide stimulus packages for the Food, Hospitality and QSR industry. We are having high expectations from the Union Budget and we hope that the government acknowledges our industry this time and helps us revive back to normal.”

Kausshal Dugarr, founder and CEO, Teabox, points out, “With the entire tea industry looking to pivot online in a post-pandemic world, the government should focus on increasing the pace of digitisation in semi-urban, non-urban or Tier 2 & 3 cities across the country by a faster roll-out of 5G services this year. This shall enable direct-to-consumer companies like us gain faster access to these untapped markets, expand the distribution channels and build on our customer base. This, of course will be possible if backed by initiatives to revive demand in the country by boosting job creation opportunities and accelerate growth of manufacturing and industrial activities. A reduction in personal income tax should help put more money in consumers’ hands and improve overall consumer sentiment. To attract foreign investments in the sector, facilitating ease of doing business is important so that the industry becomes attractive and there are new funding opportunities for upcoming tea brands in the country. The taxation structure needs a relook wherein the government must ensure the start-ups in the sector can be provided bigger tax breaks so that they can invest in creating a vibrant online ecosystem; whereby more value and efficiency is created. More clarity on e-commerce policies and a budget that addresses regularisation of the digital economy & an adequate information communication technology (ICT) infrastructure to support the robust growth of start-up economy will set the pace for the year ahead.”

Rahul Aggarwal, founder, and CEO of Coffeeza, voices, “The one thing, that we hope to see in the new budget, is a lower GST on small home appliances category which is currently at 18%. In our country, majority of the population aspires to own small household appliances to make their lives better and easier. With changing lifestyles, that demands a lot of time from the working populace, many of these appliances have become a necessity. Furthermore, with the coronavirus pandemic that hit in 2020, consumers are now increasingly wanting to move towards more comfortable, convenient, and smart home appliance options. The 18% GST levied becomes a deterrent for consumers to make this move. If the GST rate gets lowered (to say 12%), such appliances will be easier to buy, and more consumers will be able to afford these products, making their quality of life better.”

Sneh Jain, co-founder and MD, The Baker’s Dozen, views, “The year 2020 has been a tough one for all the industries and especially for the F&B sector; many enterprises observed a complete shutdown or were forced to downsize. According to me, a dedicated stimulus package in the Budget for the sector, predominantly targeted to individual restaurant owners would definitely help. Further, the government should also focus on easing access to credit for small and medium businesses.
From a bakery industry point of view and looking at the current scenario, the bakery establishments cannot claim a complete input tax credit. While this led to the increase in the price pre-Covid, with increased costs of hygiene and manufacturing due to strict adherence to protocols, there is an urgent need to reinstate 100% input tax credit for the sector.
Personally, I believe there is definitely optimism for 2021, as the country opens up post lockdown and with the impending vaccine rollout. While most sectors will show growth, all business owners will still have to adhere to strict hygiene and sanitization protocols. Essential purchases will continue to dominate the family spend compared to luxury goods as the consumers will still calculate the difference between the need and want before purchasing any products. All the sectors will definitely observe an increase in discretionary spending once the jobs scenario starts to ease out and people start gradually setting back into their old lifestyle.”

Bala Sarda, Founder & CEO, VAHDAM India, says, “In the upcoming budget, we expect, reduction of Long term Capital Gains Tax on Private Equity and making it at par with the public market; stronger subsidies on import of Capital Goods used for core manufacturing and value addition for exports, and lastly, the budget can look into widening the ambit of Special Startup manufacturing zones for companies or startups which want to foray into manufacturing. This would give the government’s “Vocal for Local” initiative a timely fillip.”