GST on Restaurant Services

GST on food and restaurant  - Rules and Rate

Restaurants can be regular taxpayers or composite payers. If the restaurant is a regular taxpayer then they are eligible to collect GST and issue taxable invoices under GST Tax Regime. Or it is a composite payer they do not have to pay GST on the bill amount. The rate of GST on the restaurants depends on whether they serve alcohol or not, and whether it is Non-Air-Conditioned or Air-Conditioned. There are different types of GST Rates like 5%, 12%,18%, and 28%. 

Applicability of the GST on restaurant can prove to be difficult. Get help from the Profesional Utilities in GST on Restaurants.

Table of content  

• What is GST on restaurant services?

• GST Rate on restaurant services

• GST on restaurant services under the composition scheme

• GST on outdoor Catering Services

• Canteen services provided in schools, institutes, or factory

• Conclusion

• Frequently Asked Question

What is GST on restaurant services?

GST on restaurant services means GST that is applied to the supply of the beverage and food served by cafes, restaurants, eateries, and other establishments with dining arrangements. It covers both takeaway and dine-in services.

GST on restaurant services

GST Rate - 12% without any condition - Unit of accommodation more than 1000 less than 7500 per day or equivalent supply of the hotel accommodation.

GST Rate - 18% without any condition - Foods and beverage, accommodation other than above.

GST Rate  - 5% with no ITC Charges on goods - Provision of "restaurant services" at locations other than those designated or provision of "outdoor catering" at locations other than those designated. 

GST Rate is 18%  - Restaurant has liquor license or air conditioning

GST Rate of 28% - Any five-star hotel - All Indian restaurants take advantage of the input tax credit.

GST Rate of 28% - GST applicable on 28% of takeaway food.
 

Input Tax Credit refers to GST applied on supplies and buying stuff of restaurant menus GST amount on the tax bill.  

GST on restaurant services under the composition scheme

There are certain restrictions that are applicable to the Composition scheme. Any restaurant having a turnover not more than 1.5 crores as followed - 

• Restaurants under the composition scheme can not make interstate sales.

• Restaurants pay GST at the Concessional rate of 5% on the turnover.

• They can engage in any service other than restaurants.

• Restaurants under the Composition scheme cannot collect taxes from the customers and they can not claim input tax credits.

• They can take the services of the E-Commerce operator.

• Restaurants under the composition scheme can not engage in supply of the alcohol.

GST on outdoor Catering Services

The scope of the GST on restaurants is extended to the supply as part of any service or by way of goods which is for human consumption or any drink that is occasional in nature or event-based.

• Marriage Hall

• Events

• Conferences

• Exhibition Halls

• Indoor or Other outdoor functions

Canteen services provided in schools, institutes,s or factories - 

• Services provided on a regular basis, by contractors at fixed locations (factories, schools, colleges, and offices) would be subject to a 5% tax rate. 

• The person provides the services on a contractual basis at the mess, canteen, cafeteria, or dining space of institutions such as colleges, schools, industrial units, hospitals, offices, etc.

• The service provider will need to be qualified to receive the associated credits.

• Under this supply occasional in nature or event-based is not covered. Rate GST on restaurant applicable rate of 18%.

Conclusion 

The tax rate applied depends on many factors such as the nature of the food served, the location, and the type of establishment. The rate of interest is higher on restaurants within hotels if the room tariff crosses the amount. There are two types of restaurants either regular or composite.

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What services are included in restaurants?

"Restaurant Service" refers to the provision of food or any other item for human consumption or any drink by a restaurant, or eating establishment, including the mess, or canteen, whether for consumption on or off the premises where such food or any other item for human consumption is provided.

Can GST be claimed on the restaurant bill by us?

Restaurants are subject to either a 5% GST rate under the GST with no possibility to claim input tax credits (ITCs) or an 18% GST rate with claims for ITCs. The location of the establishment will determine this rate.

Define stand-alone restaurant.

A standalone or independent restaurant is a restaurant, operating on your own and having total control over everything. Choose a location that appeals to you, develop your own concept, and serve whatever you please. You are free to change your menu or theme any way you like, without any restrictions.

How does GST is paid by restaurants?

"The restaurant is qualified to issue taxable invoices under GST law and collect GST if it is registered as a regular taxpayer. The Scheme is a fantastic choice for small firms seeking to lighten their regulatory load.

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