GST on Food and Restaurant
The Goods and Services Tax (GST) has brought about significant changes in the taxation system of India, including the food and restaurant industry. With the implementation of GST, it is crucial for both consumers and businesses in the food sector to understand the rules and rates governing the taxation of food items and restaurants. In this article, we will explore the various aspects of GST on food items and restaurants, addressing common questions and clarifying the applicable rates.
The introduction of GST on restaurants has replaced the Service Tax and Value Added Tax regime on food services. The basic restaurant GST rates are mentioned above, which the restaurants collect from the end customers and deposit with the government.
However, small restaurants with an annual turnover of up to Rs. 1.5 crores can opt for the composition scheme under GST and pay a fixed tax rate lower than the regular GST rate. Restaurants can also claim Input Tax Credit (ITC) on the GST paid on their inputs, such as raw materials, rent, and utilities, subject to certain conditions.
The following are the key GST rates applicable to some common food items :
- Nil GST on fresh and chilled vegetables including potatoes, onions, garlic, leek etc.
- NIL GST on non-container packed dried leguminous vegetables(shelled) whether skinned/split or not
- Nil GST on fresh grapes, fresh/dried coconut, fresh/dried bananas/plantain, fresh apples,fresh pears, etc.
- Nil GST on meat (not in container whether fresh or chilled)
- Nil GST(fresh/cooked preserved)
- Nil GST on unsweetened shell milk (pasteurised/unpasteurised), cream, etc.
- Nil GST on container packed vegetables (uncooked/steamed/boiled)
- Nil GST on vegetables preserved using brine/other means unsuitable for immediate human consumption
- 5% GST on meat packed in container bearing registered trademark/brand name
- 5% GST on birds eggs not in shell/egg yolks boiled or cooked by steaming.
- 5% GST on dried leguminous vegetables packed in container bearing registered brand name (skinned/split or not)
- 5% GST on ginger (excluding fresh ginger), turmeric (excluding fresh turmeric), thyme, curry leaves, bay leaves, etc.
- 5% GST on food such as meal/powder of dried leguminous vegetables
- 12% GST on vegetables, fruits, nuts and edible plant parts preserved using sugar
- 12% GST on vegetables, fruits, nuts and edible plant parts that are preserved/prepared using vinegar/acetic acid.
- 18% GST on food preparations such as those prepared using flour, malt extract, etc. containing cocoa less than 40% of total weight.
- 18% GST on chocolate and other cocoa products
The list is indicative and rates are subject to periodic change.
Impact of GST on food
GST on restaurants has simplified taxation by replacing multiple taxes with a single tax. GST on restaurant food has made it easier for restaurants and food businesses to comply with tax regulations and has reduced the cost of compliance.
Under GST on restaurant services, restaurants and food businesses can claim Input Tax Credits for taxes paid on purchases, helping reduce the overall tax liability for restaurants and food businesses.
GST has brought about significant changes in the restaurant and food industry. While it has simplified taxation and increased transparency, it has also increased the tax burden for businesses. However, with the ability to claim the Input Tax Credit, the impact on prices has been mixed.
Despite the initial challenges, the GST system has brought about a much-needed system overhaul and may benefit the industry in the long run. As the government continues to refine the GST system, the restaurant GST rates may change in the coming years.
