GST Rates on Restaurant under GST Regime

GST rates for restaurant, canteens or hotels are confusing. So is confusing the eligibility of Input Tax Credit (ITC) under GST. This article is prepared to clear such confusions on the basis of

• Notification no. 11/2017 Central Tax (Rate)
• Notification no. 46/2017 Central Tax (Rate)
• Notification no. 13/2018 Central Tax (Rate)

 

Standalone restaurants, irrespective of whether air conditioned or not, will attract 5% GST without ITC. For example, Dominos provides only supply food services, it will charge 5% without ITC.

Restaurant located in the premises of hotels, inns, guest houses, clubs, campsites etc, having value of supply (realised amount) 7,500 rupees and above per unit per day or equivalent will attract 18% GST with ITC. In other words, if the value of supply is:

• 7,500 and above   –   GST @ 18%
• Otherwise  –   GST @ 5%

A person who is engaged in supply of alcoholic liquor for human consumption or a restaurant serving alcoholic liquor cannot opt for composition scheme.

On the basis of above information

GST Rates on Restaurant bills can be summarized as-:

Type of Restaurants	GST Rate
Only Restaurants	5% no ITC
Restaurants forming part of Hotels ,value of supply does not exceed Rs 7500	5% no ITC
Restaurants forming part of Hotels ,value of supply exceeds Rs 7500	18% with ITC
Event Catering Outdoor catering	18% with ITC
Restaurant serving Alcohol	18% with ITC

 

FAQs on Eligibility of Input Tax Credit on Food and Beverages

Composition for Restaurant

Composition scheme is preferred for the reason of less compliances. Restaurants are required to pay GST at a concessional rate of 5% (without input tax credit) on the turnover under Composition Scheme subject to following restrictions-

• Turnover should not be more than Rs 1.5 Crores (Rs 1 Crore in case of special category States)

• Provide only restaurant services (special exception carved out for services like interest and exempt services)

• No inter-state supply of goods by Restaurants

• Cannot supply any items exempt under GST

• No supply through an e-commerce operator like zomato, swiggy etc.

• They cannot collect taxes from the customer

• Mention the words “composition taxable person, not eligible to collect tax on supplies” on the top of the bill of supply.

• Also mention the words ‘composition taxable person’ on every notice or signboard prominently displayed at their place of business.

Important Difference between Composition and Regular scheme

 

Regular scheme for Restaurant under GST

• The rate for standalone restaurant under regular scheme is same i.e. 5% (without ITC).

• They can collect taxes from the customer @5%

• Supply through an e-commerce operator like zomato, swiggy etc

• Can supply Inter-state by Restaurants

 

What’s the treatment of GST if the restaurant has tie up with Zomato, Swiggy, JustEat, TinyOwl etc.?

The website ties up with different restaurants and offers its services of food delivery. The customer orders food on the website and makes the payment either through credit/debit card or in cash on delivery. The payments are collected by the website.

There are two transaction here-

• Restaurant is selling food articles for say Rs. 105. GST shall be paid on this amount; i.e. Value of goods plus GST is equal to Rs. 105.
• Another transaction is Rs. 2 commission received by Zomato. Zomato invoice shall be commission plus GST is Rs. 2.

The restaurant shall be eligible to take credit of this GST paid as commission is an input service. There is TDS requirement. The restaurant should deduct Income Tax TDS on the commission amount. That TDS can be paid by Zomato itself, on restaurant behalf. Further, Zomato is required to collect GST TDS under Section 52 of the CGST Act. The restaurant must receive a commission invoice from Zomato on certain intervals, may be on a monthly basis.

 

GST rates of Hotels is 18% with ITC and Restaurant’s as on are 5% without ITC. Whether “5% without ITC rate”, is it regular or composition scheme?

In case of only restaurant services, GST rate is same for both 5% without ITC rate, as

• Composition dealer cannot claim ITC , and
• Regular dealer not eligible for ITC as per Notification 46/2017- Central Tax (Rate), dated 14th November 2017.

New GST Payment and Input Tax Credit (ITC) calculator

 

I have business of Restaurant in the state of Tamil Nadu & Karnataka. What is the turnover limit for registration under GST for regular and composition scheme. Is it compulsory that if I registered under composition in Tamil Nadu, then I have to register under composition scheme in Karnataka as well. As GST registration is based on PAN.

Yes, it is based on pan you have to apply regular or composition scheme every State.

In case of regular provisions of registration, the threshold limit for registration is 40 lakhs for goods and 20 lakhs for supply of services. Aggregate Turnover is to be calculated all india basis for the person having same PAN. The Threshold limit for composition is Rs.1.5 crores calculated on all india basis for person having same PAN. If you have more than one registration on the same PAN then all registration has to pay tax under composition scheme.

Requirement of GST Registration in India

What will be GST rate if swimming pool as well as Restaurant both services are provided together? Can they avail ITC? Can they opt for composition scheme?

GST rate will be 18%. Composition can be opted if gross turnover below 50 lakhs as services of swimming pool becomes the supply of services for opting composition scheme, turnover should be less than 50 lakhs.

HSN and SAC to be declared only above this Limit

 

I have hotel business and room rent is 7300 per day and 800 for extra bed. Then I have to put 18% GST on 7300+800 =8100? or highest rate is 7300 then charge GST @5% ?

As per Notification 13/2018 Central Tax (Rate), the word declared tariff has now been substituted with the word value of supply, the GST on hotel room will be charged on transaction value. So, the value will be 8100 and rate will be 18%.

Change in GSTIN Registration Details

I run a restaurant where I serve alcohol and provide food also. How do I generate my invoices. What will attract GST and what will attract VAT?

Since, you are providing both taxable and non-taxable supply. You will charge VAT on the non-taxable supply (which is alcohol for human consumption) and GST on all other taxable supplies.

 

For any question visit us at forum

 

Disclaimer– The above article is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon.  It is being prepared based on understanding of provisions as stood applicable as on date.

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