GST Reporting for Restaurants: Food, Liquor & Swiggy/Zomato Orders

GST Reporting and Accounting for Restaurants Selling Food, Liquor and Online Orders through Swiggy & Zomato – A Practical Guide

Summary: The article explains the GST treatment, accounting entries and return reporting for restaurant revenue from dine-in services, takeaway, alcoholic liquor and online food delivery through Electronic Commerce Operators (ECOs) such as Swiggy and Zomato. It states that under Article 366(12A) of the Constitution of India and Section 9 of the CGST Act, 2017, food, non-alcoholic beverages and service charges are taxable under GST, while alcoholic liquor for human consumption remains outside GST and is governed by applicable State VAT/Excise laws. Using an illustrative invoice, it explains GST and Maharashtra VAT treatment, GSTR-1 reporting of taxable supplies under Table 7 and alcoholic liquor under Table 8 as a Non-GST Supply, and identifies common reporting and accounting errors. The article further explains that under Section 9(5) of the CGST Act, GST liability on restaurant services supplied through Swiggy and Zomato rests with the ECO, while the restaurant reports such supplies in Table 14 of GSTR-1, records revenue at gross value, separately recognises commission and related taxes, and reports these supplies in the appropriate GSTR-3B table. It also emphasises periodic reconciliation of books, POS reports, settlement reports, GSTR-1, GSTR-3B and VAT/Excise returns.

Introduction: Restaurants today earn revenue through dine-in services, takeaway, alcoholic liquor, and online food delivery platforms such as Swiggy and Zomato. Since each source has a different indirect tax treatment, incorrect accounting or GST reporting often leads to reconciliation issues, notices from the department, and incorrect tax liability. This article discusses the correct GST treatment, accounting entries, and GSTR-1 reporting for each category with practical illustrations.

Article 366(12A) of the Constitution of India, inserted through the Constitution (One Hundred and First Amendment) Act, 2016, defines “Goods and Services Tax” as any tax on the supply of goods, services or both, except taxes on the supply of alcoholic liquor for human consumption. Further, Section 9 of the Central Goods and Services Tax Act, 2017 provides for the levy of GST on taxable supplies of goods or services. Accordingly, while restaurant services involving food and non-alcoholic beverages are liable to GST, the supply of alcoholic liquor for human consumption remains outside the ambit of GST and continues to be governed by the applicable State VAT/Excise laws. Therefore, restaurants dealing in both food and liquor must ensure proper classification and reporting of revenue to comply with the respective indirect tax laws. For better understanding, refer to the below table:

Classification of Revenue from different sources:

 Illustrative Tax Invoice

To better understand the reporting requirements, consider the following illustration.

Mr. A visits M/s ABC Hospitality, Pune, where he consumes food and non-alcoholic beverages worth ₹1,000 and alcoholic liquor worth ₹500. As per the restaurant’s policy, a 5% service charge is levied on the value of food and liquor supplied. The restaurant is liable to charge GST on taxable restaurant services and Maharashtra VAT on the sale of alcoholic liquor.

Note: The tax treatment of alcoholic liquor is governed by the respective State VAT/Excise laws. The above illustration assumes Maharashtra VAT at 10% solely for explanatory purposes.

So, ultimately Mr. A is required to pay a total of ₹1,679,  If he rounds it off to ₹1,700 and leaves the balance as a tip, the waiter will likely appreciate the gesture more than any accountant appreciates an unreconciled GST return.

Reporting the Above Invoice in GSTR-1

While filing Form GSTR-1, it is important to distinguish supplies taxable under GST from supplies that are outside the GST regime.

The taxable value relating to food, non-alcoholic beverages and taxable service charges, together with the corresponding CGST and SGST, should be reported under Table 7 – B2C (Others), assuming the transaction qualifies as a B2C supply.

The value of alcoholic liquor for human consumption should not be reported as a taxable supply under GST. Instead, it should be disclosed under Table 8 – Nil Rated, Exempted and Non-GST Supplies as a Non-GST Supply, since alcoholic liquor for human consumption falls outside the ambit of GST.

Using the above illustration:

Table 7 – B2C (Others)

Table 8 – Nil Rated, Exempted and Non-GST Supplies

Accordingly, the GSTR-1 summary would reflect the value of alcoholic liquor under Non-GST Supplies, while GST liability would arise only on the taxable restaurant services. Although both food and liquor contribute to the restaurant’s overall turnover, GST is payable only on supplies falling within the scope of the CGST Act.

Common Errors to Avoid:

• Reporting Liquor Sales as taxable turnover in GSTR-1.
• Not Reporting Liquor Sales in GST merely on the basis of no tax applicability or being non GST supplies.
• Charging GST on alcoholic liquor.
• Reporting Swiggy /Zomato sales under regular B2C tables instead of Table 14.
• Maintaining a common sales ledger for food and liquor.
• Reconciling books with GSTR-1 without excluding Non-GST turnover.
• Recording sales net of Swiggy/Zomato commission instead of recognizing commission as a separate expense.

Journal Entry in Books of M/s ABC Hospitality, Pune:

(Being food, liquor and related charges billed to the customer.)

Reporting Online Food Delivery Sales through E-Commerce Operators (Swiggy/Zomato):

Apart from dine-in sales, many restaurants also receive orders through Electronic Commerce Operators (ECOs) such as Swiggy and Zomato. The GST treatment of such supplies differs from conventional restaurant sales due to the provisions of Section 9(5) of the CGST Act, 2017.

Under Section 9(5), the liability to pay GST on restaurant services supplied through an Electronic Commerce Operator rests with the ECO, and not with the restaurant, subject to the notified conditions. Consequently, although the restaurant continues to record the sale in its books of account, the responsibility for discharging GST is shifted to the Electronic Commerce Operator.

Accordingly, the restaurant is required to report both categories of supplies separately in Form GSTR-1. Dine-in supplies should be reported in the applicable B2B/B2C tables, whereas restaurant services supplied through Electronic Commerce Operators should be reported in Table 14. Proper segregation ensures that the same supply is not reported twice and prevents duplication of GST liability.

Illustrative Example

Assume M/s ABC Hospitality receives an online order through Swiggy/Zomato, amounting to ₹2,000 (exclusive of GST).

• Taxable value of restaurant service: ₹2,000
• GST Charged from Customer on Food @ 5%: ₹100
• GST liability under Section 9(5) is payable by the Electronic Commerce Operator (ECO), i.e., Swiggy/Zomato, as applicable.
• Amount to be reported by the restaurant: ₹2,000 under Table 14 of Form GSTR-1 by mentioning the GSTIN of the ECO.

Accordingly, while the sale forms part of the restaurant’s turnover and is recorded in the books of account, the corresponding GST liability is discharged by the Electronic Commerce Operator.

Accounting Treatment in the books of M/s ABC Hospitality, Pune

The restaurant may pass the following accounting entry upon recognition of revenue:

Swiggy / Zomato Receivable A/c …………Dr.

To Restaurant Sales A/c

Subsequently, upon receipt of the settlement amount:

Bank A/c …………………………………………Dr.

Commission Expense A/c …………………Dr.

TCS / TDS (where applicable) …………………Dr.

GST on Commission (Input CGST/SGST or IGST) …Dr.

To Swiggy / Zomato Receivable A/c

The Swiggy / Zomato receivable is recognized at the gross invoice value and later adjusted against:

• commission,
• GST on commission,
• TCS deducted under Section 52 (where applicable), and
• the net amount credited to the bank.

This accounting treatment ensures that:

• Restaurant revenue is recognised at its gross value.
• Commission charged by the Electronic Commerce Operator is recognised separately as an expense.
• GST charged by the Electronic Commerce Operator on its commission may be claimed as input tax credit, subject to the provisions of the CGST Act and the fulfilment of prescribed conditions.

GSTR 3B

IN GSTR 3B, Restaurant services supplied through an Electronic Commerce Operator under Section 9(5) are reported in the appropriate table of GSTR-3B meant for supplies on which tax is payable by the ECO, whereas on the other hand, dine-in and takeaway services supplied directly by the restaurant, where the restaurant itself is liable to pay GST, should continue to be reported under the regular outward taxable supplies in Form GSTR-3B, and the corresponding GST liability should be discharged by the restaurant.

Proper segregation between direct restaurant supplies and supplies made through Electronic Commerce Operators ensures accurate GST reporting, prevents duplication of tax liability, and facilitates reconciliation between the books of account, Form GSTR-1 and Form GSTR-3B.

Restaurants should periodically reconcile:

• Books of Accounts
• POS Reports
• Swiggy/Zomato Settlement Reports
• GSTR-1
• GSTR-3B
• VAT/Excise Returns

Conclusion:

Proper segregation of food sales, liquor sales and online restaurant services is essential for accurate GST compliance. Maintaining separate ledgers, reporting supplies under the correct tables in GSTR-1, and recognizing revenue at its gross value significantly reduce reconciliation issues and departmental disputes. A well-structured accounting system not only ensures statutory compliance but also provides reliable financial information for management decision-making.