Eating out at cafes or restaurants post the implementation of the Goods and Services Tax (GST) has suddenly become a debatable topic among consumers.
Restaurant bills prior to the passage of GST had three basic levies over and above the total amount charged for consumption. These are:
The prices of all services have been affected since the introduction of GST from July 1, after finishing different types of tax and cess. It is important to understand how GST is impacting your hotel bill. Restaurant food is kept inside GST. What will your bill look like after service tax, service charge, and VAT deletion, and at what rate will you get the tax in AC and non-AC restaurants?
First, understand that alcohol is excluded from the GST radius, so if you take alcohol with meals in the restaurant, then GST will be eaten only on food, not on alcohol. Alcohol will look like VAT as before and it will be different.
Service Tax: This was the tax charged on the services of the restaurant.
Service Charge: This is charged by restaurants and a customer is not legally bound to pay as per government rules.
VAT: This is the tax on the food consumed.
However, with the rollout of GST, all these levies have been subsumed. From now on, your food bill will only have SGST or State GST and CGST or Central GST.
Here are a few pointers to keep in mind after you have finished stuffing and are looking at your bill:
At every AC restaurant, 18% GST will be eaten. At the same time, GST, which is being eaten in a non-AC restaurant, will depend on whether the restaurant serves alcohol or not. In non-alcoholic restaurants serving non-AC restaurants, 18% GST will be eaten and 12% GST on eating in non-alcoholic restaurants Remember that GST will only eat here, not on alcohol. 12% GST will be on pre-packed and pre-cooked snacks.
Such restaurants whose annual turnover is less than Rs. 75 lakhs, only 5% will be GST. In some states, if the annual turnover is less than 50 lakh, it will be 5% GST. These states are Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagalim, Tripura, Sikkim and Himachal Pradesh.
No restaurant can charge you GST of 28 per cent.
Moreover, the tax department has urged restaurants, hotels and food eateries to slash prices of food items to pass on the benefit of input tax credit to consumers.
One must also remember that GST will be levied on entire sum of food bill, including service charge.
Note – Please note that the above article is part of our continuous research on the related matters. It is based on our interpretation of related regulations which may differ person to person. Readers are expected to take expert opinion before relying on above.