Know About GST on Restaurant Services in India

By Online Legal India Published On 25 Jan 2023 Category GST

The Government of India introduced GST to alleviate the confusion caused by the previous tax regime. This all-encompassing indirect taxation system simplified formerly complex taxes such as Excise Duty, Value Added Tax, and so on. As a result, people were relieved because the change cleared up a lot of confusion.

The new GST tax structure took effect in various sectors of the country’s economy in 2022. Restaurant services will also be subject to Goods and Services Tax laws. Experts believe that the GST on Restaurant Services will be beneficial overall.

Restaurants, like other businesses with an income of more than Rs. 20,000, will be required to register GST. If a restaurant’s annual aggregate revenue in a special category state reaches Rs. ten lakhs, the restaurant must register for GST. Restaurants with less than this amount of annual income can also choose voluntary GST registration.

Types of GST on Restaurant Services

The GST on restaurant food is divided into the following components:

CGST: The Central government collects this tax when a sale occurs within a state.

SGST: The state government accumulates this tax on an intra-state sale

IGST: This tax is collected by the central government for an inter-state sale.

GST Rate for Restaurant services

GST on Non-Air Conditioned Restaurants

The GST on restaurants without air conditioning is nearly equivalent to the GST for air-conditioned restaurants, with the exception that the GST on food services is 5% because of the difference in premise condition. In addition, any outdoor catering services provided individually or through a restaurant are subject to an 18% GST on catering services. This also applies to food trucks, and both have the same GST rate.

GST Rate on Restaurants with Air Conditioning

The GST on restaurant services differs depending on whether the restaurant is air-conditioned or not. The following are the GST rates for AC Restaurant services:

Type of Restaurant	GST Rate
Railways/IRCTC	5% without ITC
Standalone outdoor catering services	5% without ITC
Standalone Restaurants	5% without ITC
Restaurants within hotels (Where room tariff is less than Rs 7,500)>	5% without ITC
Restaurants within hotels (Where room tariff is more than or equal to ? 7,500)	18% with ITC
Normal/composite outdoor catering within hotels (Where room tariff is less than ? 7,500)	5% without ITC
Normal/composite outdoor catering within hotels* (Where room tariff is more than or equal to ?7,500)	18% with ITC
Food services supplied at event-based or occasional exhibitions, events, conferences, outdoor and indoor functions, and other functions	18% with ITC

According to the GST regulations, the Service Tax and Value Added tax amounts had been combined into a single comprehensive rate. The GST Council reduced the tax on non-air conditioned restaurants from 12% to 5%. Additionally, the 18% GST rate has been set on restaurants with air conditioning. The cloud kitchens will be charged similarly to non-air-conditioned restaurants. The major question of customers is where they can see the service charge on the restaurant’s bill. Carefully comparing the food bill during GST can help them out.

The new GST charges are advantageous to the size of the restaurant industry. Experts anticipate that the restaurant industry will grow in the next years as a result of the good impact of GST. Furthermore, the lower tax rate is expected to assist small restaurants and cloud kitchens significantly.

GST Registration in Restaurant services

Once all of the necessary documents have been collected for GST registration, you must complete the following steps:

Step 1. Apply for GST registration

To begin, fill out form GST REG - 01 to register for GST registration. After completing the form, you have to upload the documents having your digital signature on them.

Step 2. Documents verification

After the submission of your application, the department officer will check your application along with the documents you uploaded. If all the details in the application are correct, he or she will grant you a registration certificate; otherwise, your application may be rejected.

Step 3. Get your GSTIN and download the certificate.

The department will thereafter issue your GSTIN and registration certificate.

Conclusion

We hope this blog has provided you with all of the necessary information on GST on Restaurant Services and the GST rate for restaurants. And if you’re starting your own restaurant, get your GST registration certificate with the help of a team of experts at Online Legal India.