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The Goods and Services Tax was introduced to promote equitable distribution of tax revenue between the authorities and clear any confusion pertaining to the various indirect taxes, among other things. Previously, indirect taxes such as value-added tax (VAT), central excise duty, and service tax, among others, were levied on either the producer or the consumer of the good/service. Since 2017, only three forms of Goods and Services Tax have been charged to the parties involved in trading a particular product or service, namely CGST, SGST, and IGST.

 

While the GST regime centralises taxation applicable to almost all commercial activities, it does not mean that all sectors that indulge in the trade of goods and services in India are charged a single GST rate. One such example is that of the Restaurant or the Hospitality sector. The individuals associated with the industry in question are subjected to varying GST rates, depending on their location, stakeholders, and the price range under which their respective accommodation fares fall.

 

This article will take you through the applicable GST rates laid out by the government of India for the restaurant sector. As mentioned previously, different types of restaurants attract different rates of GST on food, bills, accommodation, and other forms of services provided.

GST Rates on Restaurant Services

Type of Restaurant

GST Rate on Restaurants in India

Restaurants found in and around Railways/IRCTC

5% (excl. ITC)

Independent generic restaurants

5% (excl. ITC)

Independent outdoor catering/food delivery services

5% (excl. ITC)

Restaurants in hotels

where room tariff is ₹7,500 at the most

5% (excl. ITC)

Generic outdoor catering services within the premises of a hotels where room tariff is ₹7,500 at the most

5% (excl. ITC)

Restaurants within hotels where room tariff is more than/equal to ₹7,500

18% (incl. ITC)

Outdoor catering within the confines of hotels where room tariff is more than/equal to ₹7,500

18% (incl. ITC)

It must be noted that ITC stands for Input Tax Credit. When one mentions this particular concept, they refer to the credit claimed on the GST paid on the purchase of Goods and Services. The same is ideally collected by business establishments and has been introduced to help the business practices flourish.

Understanding a Pre-GST Restaurant Bill

Notably, before the implementation of GST, restaurants used to charge anywhere between four to six forms of indirect taxes, the total of which could go beyond the 18% threshold which the GST council has set. Before the applicable rules concerning the food GST rates and other forms of GST on restaurant-related services were put into effect, a diner or a patron had to pay taxes such as the likes of service charge, service tax, Krishi Kalyan Cess (KKC) and Swachh bharat Cess (SBC) charges along with value-added tax (or VAT).

 

Since the implementation of GST on restaurants and other sectors, a diner will only get to see two or three forms of taxes being charged to them at the most. Typically, an individual honoring their food bill in a post-GST era will have to pay the summation of state and central Goods and Services Tax (SGST+CGST), which usually amounts to 18%. However, certain establishments still tend to charge service tax alongside the applicable amount charged as GST on food items served.

Applicable GST Rates on Individual Food Items

Additionally, it must be noted that individual grocery items also attract a particular percentage as GST, which is later adjusted in the overall cost of the finished product. Below is a list of the food products that have been assigned categories by the GST council along with their applicable GST rates. 

Description

Applicable GST Rate

GST on fresh and/or chilled vegetables (For example, Garlic, Potatoes, Onions, and Brinjal)

Nil

GST on non-container leguminous vegetables which are dried and packed

Nil

GST on fresh/dried coconuts, grapes, bananas, apples, and pears, among others.

Nil

GST on uncontained fresh meat, fish

Nil

GST on birds’ eggs in a shell

Nil

GST on milk and similar dairy products

Nil

GST on container-packed vegetables

Nil

GST on vegetables that have been preserved using brine or other means which are considered to be unsuitable for immediate human consumption

Nil

GST on meat that is packed in a container bearing a registered trademark and a brand name

5%

GST on birds’ eggs which are not in a shell

5%

GST on dried vegetables which are packed in a container bearing a registered brand name

5%

GST on processed ginger, turmeric, thyme, curry leaves, and bay leaves, among others.

5%

GST on food items such as meal/powder of dried leguminous vegetables

5%

GST on vegetables, fruits, nuts, and edible plant parts which are preserved using sugar

12%

GST on food items such as fruits, nuts, and edible plant parts preserved and/or prepared using vinegar and/or acetic acid.

12%

GST on food prepared with flour, malt extract, etc., containing cocoa less than 40% of total weight.

18%

GST on chocolate and other cocoa-based edibles

18%

The Goods and Services Tax (GST) was introduced to streamline the taxation process by making one single form of indirect tax that would apply to all goods and services produced and consumed in India. The above rates can always be revised or omitted by the GST council. You can learn more about the applicable GST percentages, on Bajaj Markets.