A dine at your favourite restaurant would have produced a bill slightly different post the roll out of GST from 1st July 2017. The GST Council has settled different tax slabs for restaurants strictly based on their turnover and whether these are AC or Non–AC. Thus a customer would now pay taxes based on the type of restaurant he or she visits.

According to the new reform, consumers now shell out depending on whether they dine at a regular food joint or an Air conditioned restaurant with 12% and 18% GST applicable respectively. Restaurants with a turnover of less than or equal to Rs 75 Lakhs will be under the 5% composition, which would help them pay the tax at a flat rate. It should be noted that the GST rates of 12 and 18 percent include both the Central GST (CGST) and State GST (SGST), equally split as 6 percent and 9 percent. The tax authorities of India have recapitulated that no restaurant can charge 28% GST unless it is a five star and above the hotel, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, and where room rent is ₹ 7500 and above per day per room.

What GST means for the Common Man

Before the implementation of GST, a number of taxes such as service tax, VAT, Krishi Kalyan Cess, Swach Bharat were levied and moreover a service charge was paid by the customer. Since the levy of the service charge is not banned in India, it can be included in the bill. Therefore, as per the new reform, the customers would pay a single tax on the food bill and an additional service charge in case they would want to. Earlier the overall tax levied would generally be 20.5% above which the services charges would applicable, this has slightly come down now to 18%.

Here below we bring to you the bifurcation of the GST in various scenarios where a consumer would visit different restaurants.

  1. Non AC Restaurant/Non-Central Heating – 12% (6% CGST + 6% SGST) to be charged additionally in the Bill. If the total bill value is ₹100; The GST charged would be ₹ 12, hence the total bill value as ₹ 112
  2. Composition Scheme –  Rate of Tax Applicable would be 5% (2.5% CGST + 2.5% SGST). In this case, no tax has to be charged to the customer and should be borne by the owner of the restaurant. For instance, if the total bill is ₹ 100, the tax would be ₹ 5, which cannot be passed to the customer. Hence the customer pays only ₹ 100.
  3. AC Restaurant/Central Heating with the provision to sell Alcohol –  18% (9% CGST+ 9% SGST) to be charged. Hence if the bill value is ₹ 100, then the total bill value would be ₹ 118.

If a Non-AC restaurant possesses the license to serve liquor, they would come under 18% GST bucket irrespective of the fact whether they serve alcohol or not. However, a supply of food/drinks in outdoor catering would come under 18% GST.
As a consumer, we hope this would create some awareness amongst the people as to what component would be included in the bill.

The Government of India launched a mobile app “GST Rates Finder” where users find GST Rates for various goods and services which are available on Android platform and will soon be available on iOS platform.