Check Restaurant Bill Before You Pay. GST Rates Clarified

Next time you dine at a restaurant, do check your bill to see if the proper GST or goods or services tax rate has been levied. The tax department has come out with clarifications on rates of GST for restaurants. The clarification comes in the wake of many people flooding the social media, seeking clarity over the new tax regime. The government has also launched an app, called GST Rate Finder, to help people find out the GST rate on the particular goods/services. GST, which came into force from July 1, replaced a multitude of central and state taxes including VAT, service tax and cesses.

Food served at restaurants attract tax at two rates under GST - 12 per cent and 18 per cent - depending on whether it is an AC restaurant or whether the restaurant has the licence to serve alcohol. 

It should also be noted that the GST rates of 12 per cent and 18 per cent include both CGST (Central GST) and SGST (State GST). For the GST tax rate of 12 per cent, it is split at 6 per cent Central GST (which goes to the Centre's kitty) and 6 per cent State GST (which goes to the state's kitty). So happens for the 18 per cent GST rate, which is split at 9 per cent Central GST and 9 per cent State GST.
  The tax department has reiterated that no restaurant can charge GST at 28 per cent.

The tax department has also clarified that "the actual GST incidence will be lesser due to increased availability of input tax credit." Many input credits which were hitherto not available would be available now to be utilised against GST liability, says Sandeep Sehgal, director-tax and regulatory at Ashok Maheshwary & Associates LLP.

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It has also been clarified that restaurants up to an aggregate turnover of Rs 75 lakh that opt for the composition scheme will charge GST at the rate of 5 per cent. The lower limit of Rs 50 lakh is applicable for the states of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim and Himachal Pradesh, the tax department said. (Restaurants with annual turnover up to Rs 75 lakh can opt for the composition scheme, which enables them to pay tax at a flat rate without input credits.)

Non-AC restaurants serving no alcohol

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The tax department said restaurants without air-conditioning in any part thereof and not serving liquor will pay GST at the rate of 12 per cent.

AC restaurants or those serving alcohol

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Restaurants with partial or full air-conditioning or those serving liquor will attract GST rate of 18 per cent.

Pre-packed food

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The rate of tax on parcel of pre-packed and pre-cooked namkin sold from restaurants will attract tax at 12 per cent. Also, in case of food parcel cooked as per order, GST rates will be applicable according to service of such food in the restaurant, it noted.

The tax department has also launched the app GST Rate Finder. Available on Google Play platform for Android handsets, the app enables users to find the applicable GST rates on goods and services. The rates can also be accessed on the tax department's website.