Ever since the Goods and Services Tax (GST) was implemented on July 1 across the country, it has affected the customers directly. The new tax regime is considered as one of the biggest economic reforms since India’s Independence but its complex nature has left many people and traders confused. Just like other goods, the GST also had an impact on your restaurant bills making dining at luxurious places slightly expensive.

A uniform GST rate of 18% will be charged on takeaways as well as food served from a non-AC area of a hotel or restaurant if any of its part has a facility of air conditioning, the government.

GST rate under different situation

  • The new Goods and Services Tax (GST) regime, which was rolled out from July 1, provides for levy of 12% on food bill in non-AC restaurants
  • After the implementation of the new regime, if we are eating in a Non-AC restaurant, we have to pay 12% as tax. It is made of Central GST (6%) and State GST (6%). The same rates also apply for local delivery restaurants. However, if you are in an AC restaurant, you will have to pay 18% tax irrespective of the fact that it serves alcohol or not.
  • The tax rate for AC restaurants and those with liquor licence will be 18% while 5-star hotels will charge 28% GST.

CBEC clarification on GST rate

  • The Central Board of Excise and Customs (CBEC) has clarified GST rates that will be levied by restaurant-cum-bars where the first floor area is air-conditioned and used for serving food and liquor while the ground floor only serves food and non-AC.
  • The CBEC said tax will have to be charged at 18% irrespective of from where the supply is made, first floor or second floor.
  • Tax has to be charged at 18% on supplies of food made from their takeaway counter.

So, if any part of the establishment has a facility of air conditioning, then the rate will be 18% for all supplies from the restaurant. For example, if we have taken the food from the ground floor of an outlet which doesn’t have AC, we will still have to pay 18% tax if the third floor of the same outlet has an AC restaurant.

Following conditions must be satisfied by the restaurant for registration in the composition scheme:

  • AC restaurants and those with liquor licence are not eligible for the composition scheme as they are engaged in supplying liquor.
  • The restaurant cannot be classified as a casual taxable person.
  • In case the restaurant purchased any goods or services from an unregistered supplier, then the restaurant must have paid GST on reverse charge basis.
  • Restaurant cannot make any inter-State outward supplies of goods.
  • Restaurant cannot make any supply of goods through an electronic commerce operator who is required to collect tax at source.
  • The restaurant cannot be involved in the manufacture of following goods:
    • Ice cream and other edible ice, whether or not containing cocoa
    • Pan masala
    • Tobacco and manufactured tobacco substitutes

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