Everything about GST on Food and Restaurants

In the ever-evolving landscape of taxation, the restaurant and food industry has undergone a significant transformation with the introduction of the Goods and Services Tax (GST). This article serves as your guide to understand the impact of GST on food items, restaurants, and the overall dining experience. Let's look into the details of GST rules, rates on food, and the implications for both consumers and restaurant owners.

What is a Pre-GST Restaurant Bill:

Before the era of GST, restaurant bills were a compilation of various taxes and charges. A typical pre-GST bill included VAT (tax on the food portion), Service Tax (tax on services), and Service Charge (an income to the restaurant, not a tax). With the introduction of GST, this billing structure underwent a significant overhaul.

What are GST Rules for Restaurants:

Restaurants now fall under two GST rate categories:

5% GST rate:

No option to claim Input Tax Credit (ITC).

18% GST rate:

ITC can be claimed. The rate depends on the location, with higher rates for restaurants within hotels where the room tariff exceeds a specified amount.

S No Type of Restaurants GST Rate 1 Food supplied or catering services by Indian Railways/IRCTC 5% without ITC 2 Standalone restaurants, including takeaway 5% without ITC 3 Standalone outdoor catering services or food delivery service 5% without ITC 4 Restaurants within hotels (Where room tariff is less than Rs 7,500) 5% without ITC 5 Normal/composite outdoor catering within hotels (Where room tariff is less than Rs 7,500) 5% without ITC 6 Restaurants within hotels (Where room tariff is more than or equal to Rs 7,500) 18% with ITC 7 Normal/composite outdoor catering within hotels (Where room tariff is more than or equal to Rs 7,500) 18% with ITC

What are GST Rates on Food and Restaurant Services:

GST Rate on Restaurant Services:

Individuals supplying catering or other services in hotels with room tariffs of Rs 7,500 or more fall under this category.

GST Rate on Food Items:

Popular food items have varying GST rates. Notably, this list is not exhaustive, emphasizing the need for businesses and consumers to stay informed.

Particulars	GST Rate
GST on fresh and/or chilled vegetables	Nil
GST on frozen vegetables	Nil
GST on dried vegetables that are packaged and labelled	5%
GST on dried leguminous vegetables other than pre-packaged and labelled	Nil
GST on dried leguminous vegetables that are pre-packaged and labelled	5%
GST on fresh/dried coconuts, grapes, apples, bananas, and pears, among others	Nil
GST on fruits like grapes, apples, bananas, pears, mangoes, citrus fruits, and berries, among others	Nil
GST on vegetables, fruits, nuts, and edible plant parts that are preserved using sugar	12%
GST on fruits, nuts, and edible plant parts that are preserved and/or prepared using vinegar and/or acetic acid.	12%
GST on fresh milk, pasteurised milk (excluding UHT milk), and milk and cream (not concentrated nor contains added sugar or sweeteners	Nil
GST on milk and cream that is concentrated or contains added sugar or sweeteners	5%
GST on curd, lassi, and buttermilk, other than pre-packaged and pre-labelled	Nil
GST on curd, lassi, and buttermilk that is pre-packaged and pre-labelled	5%
GST on yoghurt and cream, whether containing sugar/flavouring or not	5%
GST on fresh or chilled meat and fish	Nil
GST on meat that is packaged and labelled	5%
GST on birds’ eggs in shells	Nil
GST on birds’ eggs which are not in a shell	5%
GST on rice other than pre-packaged and labelled	Nil
GST on rice, pre-packaged and labelled	5%
GST on wheat or meslin (i.e. maize flour) other than pre-packaged or labelled	Nil
GST on wheat or meslin, pre-packaged and labelled	5%
GST on rye other than pre-packaged and labelled	Nil
GST on rye, pre-packaged and labelled	5%
GST on cereal flours other than of wheat or meslin, rye, etc., pre-packaged and labelled.	5%
GST on chocolate and food preparations containing cocoa	18%

Impact on Restaurant Business Owners:

In the GST regime, Service Tax and VAT are amalgamated into a single rate. However, service charges may still appear on the bill. A comparative analysis of a pre-GST and post-GST food bill showcases a significant reduction in the total amount payable to tax authorities.

For instance, assuming VAT is applicable at 100% of the value without any abatement, the total amount payable under the current regime sums up to Rs.950. Under GST, the net outflow is reduced to Rs.250, bringing joy to both consumers and restaurant owners.

Particulars	Billing under VAT regime	Billing under GST regime
Total Bill	5000	5000
Output Tax
–VAT @14.5%	725
–Service tax@6%	300
GST @5%		250
Total output tax liability	1025	250
Input credit
—VAT ITC (no ITC on ST)	75
—GST ITC
Final Output tax liability
–VAT	650
–Service Tax	300	250
–GST

Conclusion:

As we embrace the era of GST in the food and restaurant industry, it's evident that the new tax regime brings reasons to rejoice. With simplified billing structures, reduced rates, and potential cost savings for both consumers and business owners, GST opens the door to a more transparent and economically favorable dining experience. So, go ahead, explore those new food joints in your neighborhood, and savor the flavors with the assurance that GST has added an extra layer of simplicity and affordability to your gastronomic journey.