The Goods and Services Tax (GST) has brought about significant changes in the taxation system of India, including the food and restaurant industry. With the implementation of GST, it is crucial for both consumers and businesses in the food sector to understand the rules and rates governing the taxation of food items and restaurants. In this article, we will explore the various aspects of GST on food items and restaurants, addressing common questions and clarifying the applicable rates.
5% or 18% GST Rate
Under GST, restaurants are subject to either a 5% GST rate without the option to claim Input Tax Credit (ITC) or an 18% GST rate with ITC claims. The applicable rate hinges on the location and nature of the restaurant, including factors such as whether it’s standalone or situated within a hotel. Particularly, restaurants within hotels experience a higher GST rate if the room tariff surpasses a specified threshold.
GST Rates on Restaurant Services
The complexity of GST rates on restaurant services is further unveiled through the following categories:
|Food supplied or catering services by Indian Railways/IRCTC||A uniform 5% GST rate applies without ITC|
|Standalone restaurants, including takeaway||A consistent 5% GST rate without ITC|
|Standalone outdoor catering services or food delivery service||These services also incur a 5% GST rate without ITC|
|Restaurants within hotels (Where room tariff is less than Rs 7,500)||A 5% GST rate prevails without ITC|
|Normal/composite outdoor catering within hotels (Where room tariff is less than Rs 7,500)||Similarly, a 5% GST rate without ITC applies|
|Restaurants within hotels (Where room tariff is more than or equal to Rs 7,500)||A higher 18% GST rate is levied, but with the option to claim ITC|
|Normal/composite outdoor catering within hotels (Where room tariff is more than or equal to Rs 7,500)||Similarly, an 18% GST rate with ITC claims is applicable.|
It’s important to note that the 18% rate encompasses individuals supplying catering services within hotels and not hotel accommodation services.
GST Rate on Food Items
|Nil GST||Fresh and chilled vegetables, frozen vegetables, fresh/dried coconuts, grapes, apples, bananas, pears, fresh milk, and more|
|5% GST||Dried vegetables, dried leguminous vegetables, curd, lassi, buttermilk, wheat, rice, chocolate, packaged meat, packaged birds’ eggs, and more.|
|12% GST||Preserved vegetables, fruits, nuts, and edible plant parts using sugar or vinegar.|
|18% GST||Chocolate and food preparations containing cocoa.|
Highest GST Rate on Food Segment: The highest applicable GST rate in the food segment is 28%, primarily for caffeinated and carbonated beverages.
Food Items with Nil GST: Yes, various food items like fresh fruits, vegetables, meat, and fish fall under the Nil GST category, as outlined in the GST rate table.
GST Rate on Chocolate and Cocoa Products: The GST rate on chocolates and cocoa products stands at 18%.
GST on Takeaway Food: GST indeed applies to takeaway food, with a rate of either 5% or 18%, contingent on the restaurant’s location.