Hello Readers, The Complete guide series has been started to enlighten budding entrepreneurs, startups, investors in relation on restaurant industry, towards the field of Accounts, Taxation and several inputs, recommendations, suggestions provided by some of the entrepreneurs in the said industry.
Our Team would be dedicated to providing data with respect to Registrations, Legal Process, Accounting (Basic), GST & Income Tax (In case if any specific changes in I.T. with respect to said business)
Every Month we would come up with guide for professionals, entrepreneurs, investors and all interested parties with respect to different type of industries to ensure there is no misguidance or the good selves or not stuck with false rumors, misinterpretations etc. In case you find anything incorrect updating in the post feel free to revert back in the comment section along with the basis.
With the evolution of E-Commerce and emergence of Swiggy, Dunzo, Zomato and various several organizations, it is seen that various entrepreneurs opt for starting a restaurant hence first part comes in with respect to registrations, hence a restaurant is required to take up following registrations
FSSAI (Food Safety & Standard Authority of India) (https://foodlicensing.fssai.gov.in/index.aspx)
Every Restaurant Owner irrespective of his organization size, nature and type of organization structure needs to obtain FSSAI License in order to commence his restaurant business, Further FSSAI Issues 3 kinds of licenses (Basic, State Central) now the question arises which one Is applicable for my business.
1. Basic License (Time taken: 15-30 days)
2. Food sale is done by temporary stall holder
3. Individual who distributes food in any religious or social gathering except a caterer.
4. Small scale or cottage industries with some conditions (detailed schedule available in FSSAI Website)
5. Restaurants fulfilling some conditions as specified in fssai portal (Check website link)
6. Central License (Time Taken: 25-30 days)
The Conditions mentioned above are exclusive which means if you are covered in any one you are required to take the license.
SHOP & ESTABLISHMENT CERTIFICATE (LABOUR LICENSE/GUMASTA LICENSE)
Shop & Establishment certificate is required for regulation of conditions of work and employment in Shop & Commercial Establishments, few states term it as Gumasta License & it is State wise License.
Applicability and fees structure depend on state to state, and there would be basic compliances required such as Salary Register, Attendance Register etc which could be scrutinized by the respective officer.
Trade License again is State wise License, every state has a schedule of activities which are mentioned in their municipal corporation Act for example Karnataka has Karnataka Municipal Corporation Act (Schedule X), Mumbai has Mumbai Municipal Corporation Act,1888 (Schedule M) etc.
This License is taken to regulate specific business to ensure that citizen is not adversely affected by Health, Hazard & Nuisance possible from the said activity carried out.
This license is 95-100% applicable in every state for Restaurant dealers.
Average Time Taken for registration under this license would be 2-3 Weeks.
GST (GOODS & SERVICES TAX)
Several Restaurants Nowadays face a difficulty in GST Rates identification, and type of registration to opt for to make it simpler for them the following are the type of registrations available for restaurant dealers (HSN 9963)
1. Composition Registration
Restaurants can plan to take up Composition registration where there is a benefit of filing returns once in a quarter with less compliance burden however there are certain things to be kept in mind before you opt for this return.
1. Annual Aggregate Turnover Should not exceed 1.5 crores
2. Rate of GST applicable would be 5% (2.5% CGST & 2.5% SGST)
3. Display of words “Composition Taxable person, not eligible to collect tax on supplies”.
4. Display of “Composition Taxable Person” in every board
5. Can Provide other services to the extent of 5 lakh or 10% of turnover.
6. Dealer should not supply “GOODS” trough e commerce operator (ex: flipkart, swiggy, Zomato etc) however restaurant business is classified as service and hence this makes it applicable to go with composition registration.
2. Regular Registration
LIQUOR LICENSE & RESPECTIVE REGISTRATIONS
Restaurants Dealing in Alcohol has to Procure Liquor License and also obtain State Excise & Vat Registration since Liquor is outside the purview of GST.
Liquor License is state wise registration and hence It is advisable to check the availability, renewal cost etc before going for the same.
For update, in Karnataka no new license has been issued since 1992, hence all the entrepreneur can do is purchase the license from existing license holder or take it on rental basis. The cost of renewals spike upto 2-3 lakhs.
Who else can provide the field issues better other than the member into it and hence our team had a brief discussion with Sir Rajkumar Poddar (Designated partner at Sikori Foods LLP, Bangalore) & Sir Lokesh Jain Dhanpatraj (Proprietor at SO FOODY) following are few Q & A ‘s which we taught to be addressed/to be asked to experts.
Note: The CGST Expense & SGST Expense is under Profit & Loss since input tax credit is not allowed against restaurant sale.
1. For TCS
2. Electronic Cash Ledger A/c Dr (2.5*1%) 0.05
To Eco A/c 0.05
This was our first complete guide series on specific industry, we look forward to comments, suggestions, recommendation and idea on the next industry we should come up with.
Suggestions would be appreciated on firstname.lastname@example.org.