This article is a curtain raiser on the myriad opportunities GST provides for Banks to expand the middle of the Banking Pyramid.
Small Finance Banks have a splendid chance to attract new customers into their fold with innovative banking products to suit GST participants.
One of the main features of GST is to widen the tax base. GST is expected to embrace a large number of Service Providers and Goods Suppliers into the tax grid.
All GST Registered entities have to have bank accounts to enable them to simply the GST compliance rules.
The first article under GST sub-tag highlights the need for restaurants to have transparent bank accounts.
Under the new GST rates announced by the Finance Minister Arun Jaitley, restaurants will be taxed on the basis of their turnover and whether or not the establishment is AC or Non-AC.
The following are GST Rates for Hotel Industry:
- · Restaurants with a turnover of less than Rs 50 lakh will be levied a tax rate of 5 percent.
- · Non-AC restaurants will have a 12% tax rate.
- · AC restaurants will have to shell out 18% tax.
- · Also, five-star restaurants will be charged a luxury tax of 28 percent.
- · Hotels, lodges with tariffs less than Rs 1,000 will be taxed at 5%.
- · Hotel lodges with tariffs between Rs 1,000- Rs 2,500 will be charged 12% tax
- · Hotel lodges with tariffs between Rs 2,500- Rs 5,000 will be charged 18% tax.
This means those restaurants that have a turnover of less than Rs 50 lakh are placed in the 5 per cent rate basket. However Restaurants that have a higher turnover than Rs 50 lakh, but do not have an ACs, will have to pay 12 per cent GST.
This is where Banks have a major window to convince restaurant owners to open Bank Accounts and be transparent about their turnover i.e below 50 lacs or over 50 lacs.
It will be easy to convince customers that their turnover is over 50 lacs and hence the GST is 12% or vice-versa, if the complete turnover is reflected in Bank accounts.
Once the turnover reflects in Bank accounts, restaurant owners also will be at ease to comply with GST guidelines and be in peace.
As the turnover starts to reflect in bank accounts, restaurant owners will start to avail other banking facilities viz
· Cheque Clearing,
· Working Capital requirements,
· Acceptance of Digital Transactions,
It is to be seen as to how Small Finance Banks tap this new opportunity. Stand alone Restaurants in India still operate in cash only and GST will nudge them into the banking sector.
Stand alone Restaurants can be defined as restaurants which offer only Boarding facilities and a proper invoice is given to the customers.
The most famous restaurants formats in India are Darshinis, fast-food joints usually run by single families.
GST effect: Be ready for confusion, disputes at restaurants from July 1
But that does not mean there won't be confusion. Many restaurant owners may find it difficult to explain the complex tax structure to customers who are not well informed about the issue.
All Your Questions About the GST and the Restaurant Business Answered! @ http://blog.posist.com/trending/all-your-questions-about-the-gst-and-the-restaurant-business-answered.html#ixzz4lPeOnEmm
GST: Fresh rate cards await customers at hotels across the country starting July 1 @ http://www.oneindia.com/india/gst-fresh-rate-cards-await-customers-at-hotels-across-the-country-starting-july1-2480450.html