In the wake of several consumers voicing their confusion on social media regarding GST rates for restaurants and the relation of the same to VAT and service tax, the government has come out with a clarification about GST rules for restaurants.
— CBEC (@CBEC_India) July 11, 2017
The food ordered at restaurants attracts two tax rates – 12% and 18% – depending on whether if it is an AC restaurant or a non-AC restaurant, and whether the restaurant has the license to serve alcohol or not.
The 12% and 18% GST rates include both CGST (Central GST) and SGST (State GST).
- For the GST tax rate of 12%, 6% is CGST and the remaining 6% is SGST.
- For the GST tax rate of 18%, 9% is CGST and the remaining 9% is SGST.
The 12% GST rate is for
- non-AC restaurants
- roadside eateries that don’t serve alcohol,
- local delivery restaurants.
The 18% GST rate is for
- the restaurants with full air-conditioning (both with or without alcohol),
- non-AC eateries that serve alcohol.
The CBEC has also clarified that “the actual GST incidence will be lesser due to increased availability of input tax credit.”
Sandeep Sehgal, director-tax and regulatory at Ashok Maheshwary & Associates LLP, told NDTV that many input credits that weren’t yet available, will now be available for utilising against GST liability.
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. To know more about how this app can be downloaded and used, click here.