The government has introduced a composition levy under the GST law which provides a simple and easy taxing mechanism for small taxpayers to keep up with GST Compliance. Under this GST composition scheme, a small business having a turnover of less than 100 lakhs can enrol for this composition levy and can pay tax at a predetermined fixed rate on the basis of their turnover. Small taxpayers enlisted under the GST composition scheme need not file monthly GST returns or pay monthly GST payments. In this write-up, we will discuss the implication of GST composition scheme for restaurants.
The following conditions must be satisfied by the restaurants for registration in the composition scheme:
|Composition Scheme – Goods and Service Tax Rates|
|Supplier of food & drinks (restaurant business)||2.5%||2.5%||5%|
|Service Providers||Supplier of services (Except supplier of food and non-alcoholic drinks) cannot opt composition scheme.|
Therefore, person engaged in supply of food and drinks (restaurant business) is required to pay GST at 5% (2.5 % CGST and 2.5% SGST).
While computing the threshold limit of 100 lakh, inclusions in and exclusions from ‘aggregate turnover’ are as follows:
|Value of all outward supplies
–Value of inward supplies on which tax is payable under reverse charge
|of persons having the same PAN be computed on all India basis.|
A person engaged in Restaurant business can pay tax under GST normal provisions without opting GST composition scheme and have to file monthly GST returns. On contrary, restaurants opting composition scheme will have to file GST returns quarterly in Form GSTR-4 on the common GSTN portal by the 18th of the month following the quarter. For an example, GST return in respect of supplies made by the restaurant from October to December is required to file the return by 18th January.