♠ GST (Goods and Service Tax) is a unified indirect tax levied on all goods and services except exempted goods and services
♠ Service sector covers various services like restaurants and hotels, transport, banking, insurance, entertainment and telecommunication services.
♠ The bulk of the services are under 18% tax rate.
♠ The rates have been increased on most of services but due to availability of Input Tax Credit (ITC), the effect of GST is not inflating on consumers.
GST is applicable on “Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, whether or not located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes”.
The GST Council in its 23rd Meeting recommended key changes in GST rates applicable for restaurants which have the effect from 15th November, 2017. The major changes were
The council said the restaurants did not pass on the input tax credit (ITC) to customers and so the ITC facility is being withdrawn and a uniform five per cent tax is levied on all restaurants without the distinction of AC or non-AC.
Restaurants in starred-hotels that charge Rs.7,500/- or more per day room tariff will be levied 18 per cent GST but ITC is allowed for them.
|Particulars||Post amendment i.e., From 15th November, 2017||Before amendment i.e., Before 15th November, 2017|
|GST Rates||Input Tax Credit||GST Rates||Input Tax Credit|
|Non-air conditioned establishments that||Don’t serve alcohol||5%||Not Available||12%||Available|
|Air-conditioned restaurants (regardless of alcohol availability)||18%
|Restaurants within hotels with||Declared Room tariff < 7,500/-||5%||Not Available|
|Declared Room tariff > 7,500/-||18%||Available|
♠ GST rate will not depend now onwards whether restaurant is Air conditioned or Non-Air conditioned, serving alcohol or not.
♠ Post amendment, restaurants would be divided into 3 categories
(i) Stand-alone restaurants
(ii) Restaurants in hotel premises
(iii) Outdoor catering