GST on Restaurants - A Guide

Restaurants operating in India are subject to Goods and Services Tax (GST). Hence, while supplying goods or services, being food or any other article for human consumption or any drink (other than alcohol) would be taxable under GST. In this article, we look at various aspects of GST as it pertains to a restaurant.

Supply by Restaurants Taxed under Services

Many Entrepreneurs wonder if the supply of foods and drinks by a restaurant would attract GST as a supply of goods or supply of services. The GST Act does not define the word restaurant or eating joint or mess. However, according to the GST Acts and Rules, any supply of food where an element of service is involved must be treated as supply of service. Hence, any supply of food or drinks were some service is involved will be the supply of service. Thus, home delivery of food will also be treated as a supply of service. Illustration: The sale of prepared sweets or fruits across the counter would be termed as a supply of goods. On the other hand, the same supply of sweets or fruits at a restaurant shall act as a supply of service.

Invoicing: GST for Restaurants

Under GST, an invoice must be provided for all supply of goods or services wherein the value of supply is more than Rs.200. For transactions lower than Rs.200, the tax invoice must be provided, if requested by the customer. All supply of services by a restaurant would be treated as intra-state supply, as supply is provided at the restaurant premises or delivered to a place close to the restaurant. Under GST, intra-state supply attracts CGST and SGST. Hence, in all restaurant bills, only CGST and SGST must be mentioned along with SAC Code. Know more about GST invoice rules and format.

GST Rates for Restaurant

The following GST rates will be applicable for restaurants from 15th November 2017.

Stand-Alone Restaurants

Stand-alone restaurants, eating joint including mess, canteen which does not have an attached residential or lodging facility will have to charge 5% GST on all food and drinks. The 5% GST rate shall divide into 2.5% CGST and 2.5% SGST.

Restaurants in Hotels

In case of a restaurant, mess, canteen or eating joint attached to a hotel, residential or lodging facility, the GST rate chargeable will be dependent upon the maximum room declared tariff charged by the lodging facility. Even if one of the rooms has a declared tariff of more than Rs.7500, the GST rate chargeable would be 18%. If the declared tariff for all the rooms in the

Declared Tariff Less Than Rs.7500 per Night/Day

If the declared tariff for all the rooms in the lodging facility is less than Rs.7500 per night/day, the GST rate applicable for the restaurant would be 5%.

Declared Tariff More Than Rs.7500 per Night/Day

Even if one of the rooms has a declared tariff of more than Rs.7500 per night/day, the GST rate applicable to the restaurant would be 18%.

Catering Services - 5% GST Rate

Note: GST rates are subject to change from time to time. Know more about GST Rate and SAC Code for Restaurants.

Supply of Drinks at Restaurant

Normally, cold drinks or aerated water shall attract 40% GST rate (28% GST + 12% GST Compensation Cess). However, if sold in a restaurant, the supply of aerated water shall act as supply of service and would attract only GST rate of 18% or 5%, depending on the type of restaurant. Click here to register or start a new Restaurant with all documentation and tax filings.