GST on Restaurant Bills: Whenever you order food in the restaurant, the role of Goods and Services Tax (GST) in the bill becomes very important. Whether you are sitting in a restaurant, taking Tekaway or asking for online food, it is important to understand how GST is applied to the restaurant bill.
This is necessary not only for customers, but also for restaurant owners, as it has a direct impact on billing, price and operational decisions. Let us closely understand the GST calculation on the restaurant bill.
What is GST on restaurant bill?
The government puts GST on restaurants based on their type and structure. Currently three major slabs apply:
- 5% GST: On the restaurants that do not claim input tax credit (ITC). It mostly consists of standalone restaurants, whether it is dine-in, tech uter or delivery.
- 12% GST: On the restaurants that are in hotels whose room fare is more than ₹ 7,500 and they claim ITC.
- 18% GST: On outdoor catering services, if they take advantage of ITC.
GST has given a consolidated tax system instead of earlier tax systems (eg service tax and VAT).
Does GST feel right?
According to the law, the GST rates are equally applied to dine-in, tech-ud and delivery. But in practice, who collects tax based on the way of service, it may change. Especially, when it comes to food aggregator platforms.
Paras Tewatiya, co-founder of Curr Crown Restaurant Chain, says, “We follow the fixed structure of 5% GST. Dine-in, Tech Aawaye and delivery on all. Having complete transparency in billing, so that customers confidence.”
Those who are registered under the restaurants composition scheme and whose annual turnover is up to ₹ 1.5 crore, pay tax at a fixed rate of 5%. However, they cannot charge GST on the bill nor can they take advantage of ITC.
GST affects the food bill
GST is not just a legal obligation for most restaurants. This directly affects the pricing of the menu and the customer’s bill.
Tewatia says, “GST is definitely a role in our pricing strategy, but we try to keep the menu balanced and accessible. We carry some tax burden ourselves, so that customers get value.”
At the same time, some restaurants consider the challenge that they do not get the benefit of ITC. According to Tewatia, “If the input tax credit is brought back, restaurants can invest in better content, infrastructure and service.”
What happens on the order of Jomato-Sweet?
When the food is ordered with an aggregator platforms such as Jomato or Swigi, the responsibility of recovering GST changes.
Yogesh Sharma, Founder and CEO of Premium Dining Brand Workmanship (Karigari), says, “In such cases, the recovery and payment of GST is made directly. The customer seats the GST breakup in the bill, but the government deposits the tax related platforms.”
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