CA Vinay Lunkad S

Vinay Lunkad SDon’t be surprised if you still find a Restaurant bill with 18% GST , plan your travel wisely for room bookings  :-

Post the amendments (15th Nov 2017) in the rates for restaurant services by the CBEC this is what is the scenario :-

Hotel ,guest house , clubs , campsites and  Commercials places etc; who provides boarding and lodging services with a room tariff exceeding 7,500 per room for a day 18% Input Tax Credit Allowed Hotels etc;


Outdoor Catering services
All others providing restaurant services whether take away or any other similar arrangements provided by restaurants , eating joints including mess and canteens 5% Without any Claim of Input Tax Credit for Hotels etc;

Kindly be noted :-

  • Henceforth there will be no differential tax rates if there is a AC facility in a Hotel or if the Hotel provides liquor, all the restaurant services will be @ 5% except for the above.
  • The service recipient cannot claim the GST charged in the bill unless the service recipient is in the similar line of business as the above services comes under ineligible list of services under Input Tax Credit u/s 17 of CGST Act 2017
  • Since the reduced rate of 5% (Earlier 18%) comes with a condition that Input tax credit can’t be claimed – it is very likely that Hotels/ restaurants etc; may increase the prices of the food in order to cover up for the loss of Input Tax Credit .

food dish mix fish restaurant volendam holland

The Input Tax credit to Hotels etc;  earlier was in a varied range depending on their scale of operations , to sum up for any Hotel, restaurants , having any input tax credit :-

More than 13% Loss to Hotels etc
Less than 13% Profit to Hotels etc
13 % Neutral – No Profit no loss
  • Further under CGST Act 2017 there is a specific provision (S-171) wherein if there is an reduction in price and the benefit of the same is not transferred the Anti-Profiteering Committee of GST may call for the assessment and question the reasons for non-reduction of prices

Following is the GST rates for Room stays or such similar stays:-

Room Tariff Per day ( Excluding any discounts)
Upto Rs.999/-
Rs.1,000 to 2,499/- 12% Input Tax Credit Allowed for Hotels
Rs.2,500 to 7,499/- 18%
7,500/-& above 28%

GST on Restaurants- All you needs to know

More Under Goods and Services Tax


  1. Bipin Mistry says:

    We are in restaurant business as well as with Hotel business, We are collection 18% on restaurant and in Hotel as per tariff rate 12%, 18% and 28% with full ITC.

    Can we charge 5% on Restaurant with reversal of corespondent ITC ??

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November 2020