GST on restaurants: Do you know new tax rates on food bills on AC, non-AC, starred hotels, eateries? All details here

By: | Published: November 11, 2017 11:21 AM

GST on restaurant: The Narendra Modi government on Friday decided to fix the Goods and Services Tax (GST) rate at 5 per cent for all restaurants and not give them input tax credit.

gst on restaurant, gst on restaurant food, gst on restaurant bill, GST, ac restaurant, food bill, 5 star hotel, Goods and Services Tax, GST council meeting, input tax credit, Restaurants, eateriesMajor relief to consumers. (PTI photo)

In a major relief to consumers, the Narendra Modi government on Friday decided to fix the Goods and Services Tax (GST) rate at 5 per cent for all restaurants and not give them input tax credit. It also decided that restaurants in starred-hotels will charge 18 pc tax with input tax credit, those in lower category hotels to charge 5 pc GST without ITC.

As many as 178 items of daily use were shifted from the top tax bracket of 28 per cent to 18 per cent, while a uniform 5 per cent tax was prescribed for all restaurants, both air-conditioned and non-AC, Finance Minister Arun Jaitley confirmed after the GST Council meeting.

Currently, 12 per cent GST on food bill is levied in non-AC restaurants and 18 per cent in air-conditioned ones. All these got input tax credit, a facility to set off tax paid on inputs with final tax.

Jaitley said the restaurants, however, did not pass on the input tax credit (ITC) to customers and so the ITC facility is being withdrawn and a uniform 5 per cent tax is levied on all restaurants without the distinction of AC or non-AC.

Restaurants in starred-hotels that charge Rs 7,500 or more per day room tariff will be levied 18 per cent GST but ITC is allowed for them. Those restaurants in hotels charging less than Rs 7,500 room tariff will charge 5 per cent GST but will not get ITC.

What experts and industry voices have to say?

-Federation of Hotel and Restaurant Associations of India

The Federation of Hotel and Restaurant Associations of India (FHRAI) on Friday said GST Council’s decision to cut tax rate for restaurants to 5 per cent without input tax credit will help restaurants across India rationalise tariffs. Welcoming the move by the council, the apex industry body
said it had sought bringing down GST rate on restaurants to 12 per cent with input tax credit or at 5 per cent without input tax credit.

“We are extremely thankful to the government for making these much required changes in the GST regime. This will help restaurants across India rationalise tariffs,” FHRAI President Garish Oberoi said in a statement.

-Deloitte India

Commenting on the development, Deloitte India said in a statement that a uniform tax rate of 12 per cent doing away with tax rate distinction between AC and non AC restaurants is welcome, but the critical issue of input tax credit eligibility cannot be ignored.

-EY India

EY India said that the GST rate changes announced today is one more positive step in this direction towards streamlining the rates, reducing complexity and increasing compliance.

-NRAI Vice President Rahul Singh

“We welcome the reduction in GST slab from very high 18 per cent to 5 per cent for an AC restaurant without any distiction on their conditioning. This is certainly historic. The very concept of Input Tax Credit (ITC) is central to GST which is to prevent cascading of taxes,” NRAI Vice President Rahul Singh said.

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