Restaurant Industry Set For Boost From Income Tax Cuts, But Misses Out On Industry Status

The restaurant industry will benefit from the expected significant increase in discretionary spending due to the government's move to reduce income tax in Budget 2025-26, National Restaurant Association of India said on Monday. National Restaurant Association of India, however, expressed disappointment at being overlooked and not being considered for its long-pending demand for industry status saying it was not classified as a labour-intensive industry, despite being the second-largest employer in the services sector, directly employing nearly 9 million people.

"Restaurant footfall had been declining over the last year. Now there will be more money in people's hands. The new tax breaks for consumers in the country will encourage the middle class to eat out more," NRAI President Sagar Daryani said in a statement.

Businesses will become more profitable as footfalls in malls and restaurants increase, spurring additional job creation, he added.

NRAI Vice President Pranav Rungta said the restaurant industry's contribution to job creation and economic activity, highlighting how increased disposable income might accelerate post-pandemic recovery.

"However, the sector remains disappointed, as its long-standing request for industry status was once again ignored. Recognising the restaurant industry as labour-intensive would have significantly boosted employment opportunities," he added.

Daryani also expressed disappointment that the GST Council has not yet responded to the restaurant sector's request for input credit.

"This remains the single most significant obstacle to our sector's growth," he said.

NRAI asked Finance Minister Nirmala Sitharaman and the Centre to prioritise recognising the industry's challenges and implementing necessary policy measures to ensure long-term sustainability.