Project Report On

“A Study On The Impact Of GST On

The Restaurants In Panvel Region”

Submitted to

University Of Mumbai For Partial Completion Of Degree

Of

Bachelor Of Commerce (Accounting And Finance)

Semester VI 2024-25

Submitted By: Parth Ahalawat

Under the Guidance of

Professor: Sankar Venugopal

ST.WILFRED’S COLLEGE OF ARTS

COMMERCE AND SCIENCE PANVEL

March,2024-25

1
 Project Report On

“ A Study On The Impact Of GST On The

Restaurant In Panvel Region”

Submitted to

University Of Mumbai For Partial Completion Of Degree

Of

Bachelor Of Commerce (Accounting And Finance)

Semester VI 2024-25

Submitted By: Parth Ahalawat

UndertheGuidanceof

Professor: Sankar Venugopal

ST.WILFERD’S COLLEGE OF ARTS COMMERCE AND SCIENCE

PANVEL

2
 March, 2024-25

ST.WILFERD’SCOLLEGE OF ARTS COMMERCE AND SCIENCE

PANVEL

2024-25

CERTIFICATE

This is to certify that “PARTH AHALAWAT” have worked and duly completed his project
work for the degree of Bachelor of Commerce (Accounting & Finance) under the faculty of
commerce in the subject of management and his project is entitled ,“A STUDY ON THE
IMPACT OF GST ON THE RESTAURANT IN PANVEL REGION" under the supervision
.I further certify that the entire work has been done by the learner under my guidance and that no
part of it has been submitted previously for any degree of diploma of any University.

It is his own work and facts reported by his personal findings and

investigation.

Date Of Submission -

Asst.Prof. Sankar Venugopal

(project guide)

3
4
 Declaration

I the undersigned Mr. Parth Ahalawat here by ,declare that the work embodied in
this project work titled “A Study On The Impact Of GST On The Restaurant
In Panvel Region”, forms my own contribution to the research work carried out
under the guidance of Mr. Sankar Venugopal is a result of my own research work
and as not been previously submitted to any other University for any other Degree
/ Diploma to this or any other University.

Wherever reference has been made to previous work of others ,it has been clearly
indicated as such and included in the bibliography.

I , here by further declare that all information of this document has been obtained
and presented in accordance with acedamic rules and ethical conduct.

Name & Signature of the learner

PARTH AHALAWAT

Certified By

Name & Signature of the Guiding Professor Mr.

SANKAR VENUGOPAL

5
 Acknowledgement

To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to
do this project.

I would like to thank my Principal , Mrs. Sayma Natekar for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator Mr.Dr Akshay Kasare for his
moral support and guidance.

I would also like to express my sincere gratitude towards my project guide

Mr.Sankar Venugopal whose guidance and care made the project successful.

I would like to thank College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly and indirectly
helped me in the completion of the project especially my parents and peers who
supported me throughout my project.

6
 IMPACT OF
GST IN
RESTAURANTS

7
 Index
SERIALNO. CHAPTER PAGENO.

1 INTRODUCTIONOF GST 8

2 RESEARCHMETHODOLOGYOFGST IN 24
RESTAURANTS

3 REVIEWLITERATUREOFGSTIN 26
RESTAURANTS

4 ANALYSISANDPRESENTATIONOFGST IN 65
RESTAURANTS

5 CONCLUSION 76

8
 1. INTRODUCTIONOF GST

1.1 HISTORY.

1.2 DEFINATIONOF GST.

1.3 MAINFEATURESOFGST

1.4 SCOPEOFGST

1.5 BENEFITOFGST

1.6 TYPESOFGST

 CENTRALGOODSANDSERVICETAX
 STATEGOODSANDSERVICETAX
 INTEGRATEDGOODSANDSERVICETAX
 UNIONTERRITORYGOODSANDSERVICETAX
1.7 DIFFERENCEBETWEENDIFFERENTTYPESOFGSTTAXES
1.8 GST OBJECTIVES
1.9 LIST OF RESTAURANTS

9
 History

The implementation of the Goods and Services Tax (GST) in India was a historical move, as it
marked a significant indirect tax reform in the country. The amalgamation of a large number of
taxes(leviedatacentralandstatelevel)intoasingletaxisexpectedtohavebigadvantages.One of the
most important benefit of the move is the mitigation of double taxation or the elimination of the
cascading effect of taxation. The initiative is now paving the way for a common national market.
Indian goods are also expected to be more competitive in international and domestic markets
post GST implementation.
From the viewpoint of the consumer, there would be a marked reduction in the overall taxburden
that is currently in the range of 25% to 30%. The GST, due to its self-policing and transparent
nature, is also easier to administer on an overall scale.

When did GST start?

Several countries have already established the Goods and Services Tax. In Australia, the system
was introduced in 2000 to replace the Federal Wholesale Tax. GST was implemented in New
Zealand in 1986. A hidden Manufacturer’s Sales Tax was replaced by GST in Canada, in theyear
1991. In Singapore, GST was implemented in 1994. GST is a value-added tax in Malaysia that
came into effect in 2015.

History of GST in India

 2000: In India, the idea of adopting GST was first suggested by the Atal Bihari Vajpayee
Government in 2000. The state finance ministers formed an Empowered Committee (EC) to
create a structure for GST, based on their experience in designing State VAT. Representatives
from the Centre and states were requested to examine various aspects of the GSTproposaland
create reports on the thresholds, exemptions, taxation of inter-state supplies, and taxation of
services. The committee was headed by Asim Dasgupta, the finance minister of West Bengal.
Dasgupta chaired the committee till 2011.

 2004: A task force that was headed by Vijay L. Kelkar the advisor to the finance
ministry, indicated that the existing tax structure had many issues that would be mitigated by
the GST system.

 February 2005: The finance minister, P. Chidambaram, said that the medium-to-long
term goal of the government was to implement a uniform GST structure across the country,
covering the whole production-distribution chain. This was discussed in the budget session for
the financial year 2005-06

10
 .
 February2006:The finance minister set 1 April 2010 as the GST introduction date.

 November 2006: Parthasarthy Shome, the advisor to P. Chidambaram, mentioned that

states will have to prepare and make reforms for the upcoming GST regime.

 February 2007: The 1 April 2010 deadline for GST implementation was retained in the
union budget for 2007-08.

 February 2008: At the union budget session for2008-09, the finance minister confirmed
that considerable progress was being made in the preparation of the roadmap for GST. The
targeted timeline for the implementation was confirmed to be 1 April 2010.

 July 2009: Pranab Mukherjee, the new finance minister of India, announced the basic
skeleton of the GST system. The 1 April 2010 deadline was being followed then as well.

 November 2009: The EC that was headed by Asim Dasgupta put forth the First
Discussion Paper (FDP) , describing the proposed GST regime. The paper was expected to
start a debate that would generate further inputs from stakeholders.

 February 2010: The government introduced the mission-mode project that laid the
foundation for GST. This project, with a budgetary outlay of Rs.1,133 crore, computerised
commercial taxes in states. Following this, the implementation of GST was pushed by one
year.

 March 2011: The government led by the Congress party puts forth the Constitution
(115th Amendment) Bill for the introduction of GST. Following protest by the opposition
party, the Bill was sent to a standing committee for a detailed examination.

 June 2012: The standing committee starts discussion on the Bill. Opposition parties raise
concerns over the 279B clause that offers additional powers to the Centre over the GST
dispute authority.

 November 2012: P. Chidambaram and the finance ministers of states hold meetings and
set the deadline for resolution of issues as 31 December 2012.

 February 2013: The finance minister, during the budget session, announces that the
government will provide Rs.9,000 crore as compensation to states He also appeals to the state
finance ministers to work in association with the government for the implementation of the
indirect tax reform
.
 August 2013: The report created by the standing committee is submitted to the
parliament. The panel approves the regulation with few amendments to the provisions for the
tax structure and the mechanism of resolution.

11
 October 2013: The state of Gujarat opposes the Bill, as it would have to bear a loss of
Rs.14,000 crore per annum, owing to the destination-based taxation rule.

 May 2014:The Constitution Amendment Bill lapses. This is the same year that Narendra
Modi was voted into power at the Centre.

 December 2014: India’s new finance minister, Arun Jaitley, submits the Constitution
(122nd Amendment) Bill, 2014 in the parliament. The opposition demanded that the Bill be
sent for discussion to the standing committee.

 February 2015: Jaitley, in his budget speech, indicated that the government is looking to
implement the GST system by 1 April 2016.

 May 2015: The Lok Sabha passes the Constitution Amendment Bill. Jaitley also
announced that petroleum would be kept out of the ambit of GST for the time being.

 August 2015: The Bill is not passed in the Rajya Sabha. Jaitley mentions that the
disruption had no specific cause.

 March 2016: Jaitley says that he is in agreement with the Congress’s demand for the
GST rate not to be set above 18%. But he is not inclined to fix the rate at 18%. In the future if
the Government, in an unforeseen emergency, is required to raise the tax rate, it would have to
take the permission of the parliament. So, a fixed rate of tax is ruled out.

 June 2016: The Ministry of Finance releases the draft model law on GST to the public,
expecting suggestions and views.

 August 2016: The Congress-led opposition finally agrees to the Government’s proposal
on the four broad amendments to the Bill. The Bill was passed in the Rajya Sabha.

 September 2016: The Honourable President of India gives his consent for the
Constitution Amendment Bill to become an Act.

 2017: Four Bills related to GST become Act, following approval in the parliament andthe
President’s assent:
 Central GST Bill
 Integrated GST Bill
 Union Territory GST Bill
 GST(Compensation to States)Bill

12
TheGSTCouncilalsofinalisedontheGSTratesandGSTrules.TheGovernmentdeclaresthattheGSTBill will be
applicable from 1 July 2017, following a short delay that is attributed to legal issues.

13
 Definitionof GST
“GST is a tax on goods and services with value addition a teach stage
havingcomprehensiveandcontinuouschainofsetofbenefitsfromtheproducer’s/service
provider’s point up to the retailers level where only the final consumer should bear the
tax.”

Goods and ServicesTax(India)

Goods and Services Tax (GST) is an indirect tax (or consumption tax) levied in India on the
supply of goods and services. GST is levied at every step in the production process, but is meant
to be refunded to all parties in the various stages of production other than the final consumer.
Goods and services are divided into five tax slabs for collection of tax - 0%, 5%, 12%,18% and
28%. However,Petroleum products,alcoholic drinks, electricity, are not taxed under GST and
instead are taxed separately by the individual state governments, as per the previous tax regime.
[citationneeded]
There is a special rate of 0.25% on rough precious and semi-precious stones and 3%
[1]
on gold. In addition acess of 22% or other rates on top of 28% GST applies on few items like
aerated drinks, luxury cars and tobacco products. [2]Pre-GST, the statutory tax rate for most goods
was about 26.5%, Post-GST, most goods are expected to be in the 18% tax range.
The tax came into effect from July 1 ,2017 through the implementation of One Hundred and
First Amendment of the Constitution of India by the Indian government. The tax replaced
existing multiple cascading taxes levied by the central and state governments.
The tax rates, rules and regulations are governed by the GST Council which consists of the
finance ministers of centre and all the states. GST is meant to replace a slew of indirect taxes
with a unified tax and is therefore expected to reshape the country's 2.4 trillion dollar economy,
but not without criticism.[3]Trucks' travel time in interstate movement dropped by 20%, because
of no interstate check posts.[4]
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service
Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July
2017; Goods & Services Tax Law in India is a comprehensive ,multi-stage ,destination-based
tax that is levied on every value addition.
In simple words , Goods and Service Tax(GST) is an indirect tax levied on the supply of goods
and services. This law has replaced many indirect tax laws that previously existed in India.
GST is one indirect tax for the entire country.
So , before Goods and Service Tax ,the pattern of tax levy was as follows:

14
Under the GST regime, the tax will be levied at every point of sale. In case of intra-state sales,
Central GST and State GST will be charged. Inter-state sales will be chargeable to Integrated
GST.
NowletustrytounderstandthedefinitionofGoodsandServiceTax–“GSTisacomprehensive, multi-
stage, destination-based tax that will be levied one very value addition.”

Main Features of GST

 (i) GST would be applicable on “supply” of goods or services as against the present
concept of tax on the manufacture of goods or on sale of goods or on provision of
services.
 (ii)GST would be based on the principle of destination based consumption taxation as
against the present principle of origin-based taxation.
 (iii)It would be a dual GST with the Centre and the States simultaneously levying it on a
common base. The GST to be levied by the Centre would be called Central GST (central
tax- CGST) and that to be levied by the States [including Union territories with
legislature] would be called State GST (state tax- SGST). Union territories without
legislature would levy Union territory GST (union territory tax- UTGST).
 (iv)An Integrated GST(integrated tax- IGST) would be levied on inter-State supply
(including stock transfers) of goods or services. This would be collected by the Centre so
that the credit chain is not disrupted.

15
  (v)Import of goods would be treated as inter-State supplies and would be subject to IGST
in addition to the applicable customs duties.
 (vi)Import of services would be treated as inter-State supplies and would be subject to
IGST.
 (vii)CGST, SGST /UTGST& IGST would be levied at rates to be mutually agreed upon
by the Centre and the States under the aegis of the GSTC.
 (viii)GSTwouldreplacethefollowingtaxescurrentlyleviedandcollectedbytheCentre:
Page 5of 11
o a)Central Excise Duty;
o b)Duties of Excise(Medicinal and Toilet Preparations);
o c)Additional Duties of Excise(Goods of Special Importance);
o d)Additional Duties of Excise(Textiles andTextile Products);
o e)Additional Duties of Customs(commonly known as CVD);
o f)Special Additional Duty of Customs(SAD);
o g)Service Tax;
o h)Cesses and surcharges in so far as they relate to supply of goods or services.
 (ix) State taxes that would be subsumed with in the GST are:
o a)State VAT;
o b)Central Sales Tax;
o c)Purchase Tax;
o d)Luxury Tax;
o e)Entry Tax (All forms);
o f)Entertainment Tax(except those levied by the local bodies);
o g)Taxes on advertisements;
o h)Taxes on lotteries ,betting and gambling;
o i)State cesses and surcharges in so far as they relate to supply of goods or services.
 (x)GST would apply to all goods and services except Alcohol for human consumption.
 (xi)GST on five specified petroleum products (Crude , Petrol , Diesel , ATF & Natural
gas) would be applicable from a date to be recommended by the GSTC.
 (xii)Tobacco and tobacco products would be subject to GST . In addition , the Centre
would continue to levy Central Excise duty.

(xiii) A common threshold exemption would apply to both CGST and SGST. Tax payers with an
annual turnover of Rs. 20 lakh (Rs. 10 lakh for special category States (except J&K) as specified
in article 279A of the Constitution) would be exempt from GST. A compounding option (i.e. to
pay tax at a flat rate without credits) would be available to small taxpayers (including to
manufacturers other than specified category of manufacturers and service providers) having an
annual turnover ofuptoRs.75lakh(Rs.50lakh for special category States (except J&K and
Uttarakhand) enumerated in article 279A of the Constitution). The threshold exemption and
compounding scheme would be optional.

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1. (xiv) The list of exempted goods and services would be kept to a minimum and it would
be harmonized for the Centre and the States as well as across States as far as possible.
(xv)All Exports and supplies to SEZs and SEZ units would be zero-rated.
2. (xvi) Credit of CGST paid on inputs may be used only for paying CGST on the output
and the credit of SGST/UTGST paid on inputs may be used only for paying
SGST/UTGST. In other words, the two streams of input tax credit (ITC) cannot be cross
utilized, except in specified circumstances of inter-State supplies for payment of IGST.
The credit would be permitted to be utilized in the following manner:
o a)ITC of CGST allowed for payment of CGST & IGST in that order;
o b)ITC of SGST allowed for payment of SGST & IGST in that order;
o c)ITC of UTGST allowed for payment of UTGST & IGST in that order;
o d) ITC of IGST allowed for payment of IGST, CGST & SGST/UTGST in that
order .ITC of CGST cannot be used for payment of SGST/UTGST and viceversa.
3. (xvii)Accounts would be settled periodically between the Centre and the State to ensure
that the credit of SGST used for payment of IGST is transferred by the originating State
to the Centre. Similarly the IGST used for payment of SGST would be transferred by
Centre to the destination State. Further the SGST portion of IGST collected on B2C
supplies would also be transferred by Centre to the destination State. The transfer offunds
would be carried out on the basis of information contained in the returns filed by the
taxpayers.
4. (xviii)InputTaxCredit (ITC)to bebroadbasedbymaking it available inrespect oftaxes paid
on any supply of goods or services or both used or intended to be used in the course or
furtherance of business.
5. (xix)Electronicfilingofreturnsbydifferentclassofpersonsatdifferentcut-offdates.
6. (xx)Various modes of payment of tax available to the taxpayer including internet
banking, debit/ credit card and National Electronic Funds Transfer (NEFT) / Real Time
Gross Settlement (RTGS).
7. (xxi)Obligation on certain persons including government departments, local authorities
and government agencies, who are recipients of supply, to deduct tax at the rate of 1%
from the payment made or credited to the supplier where total value of supply, under a
contract, exceedstwolakhandfiftythousandrupees.TheprovisionforTDShasnotbeen
notified yet. Page 7 of 11
8. (xxii)Refund of tax to be sought by taxpayer or by any other person who has borne the
incidence of tax within two years from the relevant date.
9. (xxiii)Obligation on electronic commerce operators to collect ‘tax at source’, at such rate
not exceeding two per cent. (2%) of net value of taxable supplies, out of payments to
suppliers supplying goods or services through their portals. The provision for TCS has
not been notified yet.

17
 10. (xxiv)Systemofself-assessmentofthetaxespayablebytheregistered person.
11. (xxv)Audit of registered persons to be conducted in order to verify compliance with the
provisions of Act.
12. (xxvi)Limitation period for raising demand is three (3) years from the due date of filing
of annual return or from the date of erroneous refund for raising demand for short-
payment or non-payment of tax or erroneous refund and its adjudication in normal cases.
13. (xxvii) Limitation period for raising demand is five (5) years from the due date of filing
of annual return or from the date of erroneous refund for raising demand for short-
payment or non-payment of tax or erroneous refund and its adjudication in case of fraud,
suppression or willful mis-statement.
14. (xxviii)Arrears of tax to be recovered using various modes including detaining and sale
of goods, movable and immovable property of defaulting taxable person.
15. (xxix)Goods and Services Tax Appellate Tribunal would be constituted by the Central
Government for hearing appeals against the orders passed by the Appellate Authority or
the Revisional Authority. States would adopt the provisions relating to Tribunal in
respective SGST Act.
16. (xxx)Provision for penalties for contravention of the provision of the proposedlegislation
has been made.
17. (xxxi)Advance Ruling Authority would be constituted by States in order to enable the
taxpayer to seek a binding clarity on taxation matters from the department. Centre would
adopt such authority under CGST Act.
18. (xxxii)An anti-profiteering clause has been provided in order to ensure that business
passes on the benefit of reduced tax incidence on goods or services or both to the
consumers.
19. (xxxiii)Elaborate transitional provisions have been provided for smooth transition of
existing taxpayers to GST regime.

ScopeofGST

 GST shall cover all goods and services, except alcoholic liquor for human consumption,
forthelevyofgoodsandservicestax.Incaseofpetroleumandpetroleumproducts,ithas
beenprovidedthatthesegoodsshallnotbesubjecttothelevyofGoodsandServicesTax till a date
notified on the recommendation of the Goods and Services Tax Council.

Promulgation of GST Council: ProposedArticle 279Aof the Bill provides for constitution of
Goods and Services Tax Council to examine issues relating to goods and services tax and make
recommendations to the Union and the States on parameters like rates, exemption list and
threshold limits. The Council shall function under the Chairmanship of the Union Finance
Minister and will have the State Union Minister as its members.

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  AllgoodsandservicesarecoveredunderGSTRegimeexceptAlcoholicliquorfor Human
Consumption,
 TobaccoProductssubjecttolevyofGSTandCentremayalsolevyexciseduty
 GSTCouncilyettodecidetheincidenceandlevyofGSTon following;
o a)CrudePetroleum
o b)HighSpeedDiesel (HSD)
o c)MotorSpirit(Petrol)
o d)NaturalGas
o e)AviationTurbineFuel

Benefitsof GST

GST will bring numerous benefits to all stakeholders viz industries, government and citizens.
Some of these benefits are listed below:

Seamless Flow of Credit:GST will facilitate seamless credit across the entire supply chain and
across all States under a common tax base.

Elimination of Cascading effect:Goods & Service Tax would eliminate the cascading effects of
taxes on production and distribution cost of goods and services. The exclusion of cascading
effects i.e. tax on tax will significantly improve the competitiveness of original goods and
services in market will lead to beneficial impact to the GDP growth of the country. It is felt that
GST would serve a superior reason to achieve the objective of streamlining indirect tax regime in
India which can remove cascading effects in supply chain till the level of final consumers.

Revenue Gain: Revenuewill increase under GST regime because of widening of the dealer base
by capturing value addition in the distributive trade and increased compliance.

Enhanced Transparency:GST regime shall enhance transparency in the indirect tax framework
and is expected to bring down the rate of inflation.

 Zero rated Exports:Under the GST regime, exports will bezero rated in entirety unlike
thepresentsystemwhererefundofsometaxesisnotallowedduetofragmentednatureof indirect
taxes between the Centre and the States. All taxes paid on the goods or services exported
or on the inputs or input services used in the supply of such export goods or services shall
be refunded.

19
 GST will boost Indian exports, thereby improving the balance of payments position.
Exporters will be facilitated by grant of provisional refund of 90% of their claims within
seven days of issue of acknowledgement of their application, thereby resulting in the
easing of position with respect to cash flows.

 Increased Uniformity: UniformGST rateswill reduce the incentive for evasion by

eliminating rate arbitrage between neighbouring States and that between intra and inter-
State sales. Harmonization of laws, procedures and rates of tax will make compliance
easier and simple.

 There would be common definitions, common forms/formats, common interface through

GST portal, resulting in efficiencies and synergies across the board. This will alsoremove
multiple taxation of same transactions and inter-State disputes like the ones on entry tax
and e-commerce taxation existing today.

 Increased Certainty:Common procedures for registration of taxpayers, refund of taxes,

uniform formats of tax return, common tax base, common system of classification of
goods or services along with timelines for every activity will lend greater certainty to
taxation system.

 Increased Digitalisation: GST is largely technology driven. The interface of thetaxpayer

with the tax authorities will be through the common portal (GSTN). There will be
simplified and automated procedures for various processes such as registration, returns,
refunds, tax payments, etc. All processes, be it applying for registration, filing of returns,
payment of taxes, filing of refund claims etc., would be done online through GSTN. The
input tax credit will be verified online. Electronic matching of input taxcredit across India
will make the process more transparent and accountable. This will encourage a culture of
compliance. This will also greatly reduce the human interface between the taxpayer and
the tax administration, leading to speedy decisions.

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 TypesofGST

Since GST subsumed indirect taxes of both central government (excise duty, service tax, custom
duty, etc.) and state governments (VAT, Luxury tax, etc.), both the governments now depend on
GST for their indirect tax revenue. Therefore, the GST rate is composed of two rates.Intra-state
transactions willcarryoneofCGSTandoneofSGST(incaseofstate)orCGSTandUTGST(in case of
union territory). Therefore, while making an intra-state sale (i.e., sale within the same state), the
CGST collected will go to the central government and the SGST collected will go the respective
stategovernment inwhichsaleismade. Similarly, SGSTorUTGSTarereplaced with IGST when
intra-state transactions are involved.

Hence,youcansaythattherearefourtypesofGST:
 CentralGoodsandServicesTax
 StateGoodsandServicesTax
 IntegratedGoodsandServicesTax
 UnionTerritoryGoodsandServicesTax

WhatisCGST?

CGSTfullformisCentralGoodsandServicesTax.

21
CGST refers to the Central GST tax that is levied by the Central Government of India on any
transaction of goods and services tax taking place within a state. It is one of the two taxes
charged on every intrastate (within one state) transaction, the other one being SGST (or UTGST
for Union Territories). CGST replaces all the existing Central taxes including Service Tax,
Central Excise Duty, CST, Customs Duty, SAD, etc. The rate of CGST is usually equal to the
SGST rate. Both taxes are charged on the base price of the product. See the example below to
understand it better.

e.g. – In the example above, when Suresh sales a product to Pradeep in the same state
(Rajasthan), he has to pay two taxes. CGST is for the central government while SGST is for the
state. TherateofCGSTis9%,sameasSGST.Aftertheapplication ofCGST(9%ofRs10,000), the final
cost of the product will become Rs 11,800.

As you can probably guess, all the taxes in all the conditions above are borne by the end
consumer in the final cost, not by the manufacturer or the dealer of the product or service. Since
GST is levied on consumption, the state where the product is originally manufactured is not
entitled to the tax collected. If the manufacturing state levies a tax, the same will be transferredto
the consuming state through the Central government.

WhatisSGST?

SGSTfullformisStateGoodsandServices Tax.
SGST(StateGST)isoneofthetwotaxesleviedoneveryintrastate(withinonestate)transaction of goods
and services. The other one is CGST.SGST is levied by the state where the goods are being
sold/purchased. It will replace all the existing state taxes including VAT, State Sales Tax,
Entertainment Tax, Luxury Tax, Entry Tax, State Cesses and Surcharges on any kind of
transaction involving goods and services. The State Government is the sole claimer of the
revenue earned under SGST. Let’s understand this with an example.

e.g. – Suresh from Rajasthan wants to sell some goods to Pradeep in Rajasthan. The product,
originally priced atRs10,000,willattractGSTat18%ratecomprisingof9%CGSTrateand9% SGST
rate. The SGST tax amount here is Rs 900 (9% of Rs 10,000) which is fully claimed bythe
Rajasthan State Government. The rate of the product after SGST will be Rs 10,900.

What isIGST?

IGSTfullformisIntegratedGoodsandServicesTax.

22
Integrated GST(IGST) is applicable on interstate (between two states) transactions of goods and
services, as well as on imports. This tax will be collected by the Central government and will
further be distributed among the respective states. IGST is charged when a product or service is
moved from one state to another. IGST is in place to ensure that a state has to deal only with the
Union government and not with every state separately to settle the interstate tax amounts. Let’s
try to understand IGST with an example.

e.g., – Ramesh is a manufacturer in Rajasthan who sold goods worth Rs 10,000 to Suresh in
Rajasthan. Since it is an interstate transaction, IGST will be applicable here. Let’s assume the
GST rate is 18% for the particular item. So, the IGST amount charged by the Central
Government will be Rs 1800 (18% of Rs 10,000), and the refined rate of the product will be Rs
11,800.

Now,GSTisaconsumptiontaxthatmeansonlythestatewherethegoodsareactuallyconsumed will get

the tax benefits, irrespective of the manufacturing state.

WhatisUTGST(or UGST)?

UTGSTfullformisUnionTerritoryGoodsandServicesTax.
The Union Territory Goods and Services Tax, commonly referred to as UTGST, is the GST
applicable on the goods and services supply that takes place in any of the five Union Territories
of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli, Chandigarh,
Lakshadweep and Daman and Diu. This UTGST will be charged in addition to the Central GST
(CGST) explained above. For any transaction of goods/services within a Union Territory: CGST
+ UTGST

The reason why a separate GST was implemented for the Union Territories is that the common
State GST (SGST) cannot be applied in a Union Territory without legislature. Delhi and
Puducherry UTs already have their own legislatures, so SGST is applicable to them.

DifferencebetweenDifferentTypesofGSTTaxes

23
 TYPES OF CGST SGST IGST UTGST
DIFFERENCES
Applicable Intrastate Intrastate Inter-state Within one
transaction(Goods (Withinone (Withinone (between two UnionTerritory
and Services) state) state) states or one
state and one
UT)andimports
Collectedby CentralGovt. State Govt. CentralGovt. UTGovt.

TaxCreditUse SGST IGST UTGST

Priority CGST IGST CGST IGST
IGST
SGST

GST objectives:
1. Ensuringthatthecascadingeffectoftaxontaxwillbeeliminated.

2. Improvingthecompetitivenessoftheoriginalgoodsandservices,therebyimprovingthe GDP
rate too.

3. Ensuringtheavailabilityofinputcreditacrossthevalue chain.

4. Reducingthecomplicationsintaxadministrationandcompliance.

5. Makingaunifiedlawinvolvingallthetaxbases,lawsandadministrationprocedures across
the country.

6. Decreasingtheunhealthycompetitionamongthestatesduetotaxesandrevenues.

7. Completelackofadaptationmechanismsandtrainedstaff.

8. Insomecases,thedoubleregistrationmightannoypeople.Also,theseregistrationsresult in
increase compliances and cost.

24
9. Unclearestimate oftheexactimpact ofGST.

10. Noclearmechanismstocontroltax evasion.

11. OneCountry–OneTax

12. basedtaxinsteadof Manufacturing

13. UniformGSTRegistration,paymentandInputtax Credit

14. ToeliminatethecascadingeffectofIndirecttaxesonsingletransaction

Subsume all indirect taxes at Centre and State Level under

15. Reducetaxevasionandcorruption

16.Increase productivity

17.IncreaseTaxtoGDPRatioandrevenuesurplus 18.Increase

Compliance

19.Reducingeconomicdistortions

LIST OF RESTAURANTS

Restaurants in Panvel

25
Panvel city is fond of Sea Food Restaurants that serve a variety of cuisines at the most reasonable rate. The
delicacies and mouth-watering dishes made from fish are the specialty of these restaurants. Apart from sea cooked
food other cuisines like South Indian dishes, and other continental dishes are also available to serve visitors as per
their taste and quest. Biryani is another most famous dish in Panvel. Almost every restaurant in Panvel serves the
tasty biryani in different forms either its veg biryani or non-veg.

List of Restaurants in Panvel

Shabari
Address: Neel Gagan, Sector 1S, Vijay Marg,
New Panvel East, Navi Mumbai
Phone: 022 27456970, 022 27466970

Status Fine Dine

Address: Near HOC Colony, Behind Garden Hotel, Old Panvel, Navi Mumbai
Phone: +91 9820137345, +91 9320224130

Desi Tadka
Address: C1& C2, Behind NMMT Bus Depot, Savita Complex,
Asudgaon, Panvel, Navi Mumbai
Phone: 022 27464888, 022 27464777

Malvan Tadka
Address: 17, Shubh Kalash Complex, Opposite Shri Krishna Hotel,
Sector 35, Kamothe.Panvel, Navi Mumbai
Phone: 022 32252040,+91 9321022200

Vrindavan
Address: Near vrindavan Lodge, Opposite New Mhatre Accident Hospital,
Line Ali, Old Panvel,Navi Mumbai
26
Phone: 022 27459997, 022 27465554

Masala Mantra
Address: 2,Plot 26, Satyam Arcade,
Near Khandeshwar Railway station, Kamothe,
Panvel, Navi Mumbai
Phone: 022 69579869, +91 9920171399

McDonald’s McDelivery
Address: Next to Captain Restaurant & Bar, Ex Highway,
Kalamboli,Panvel, Navi Mumbai
Phone: 022 66000666

Kiba Fine dine

Address: Vighnaharta Complex, Plot 7, Sector 1,
Khanda Colony, New Panvel West, Navi Mumbai
Phone: 022 27482888, +91 8898008948

Kokan Katta
Address: 16/17, Plot 50/63/64/65, Silver Star Building,
Sector-18, Kamothe, Panvel, Mumbai
Phone: 022 64640464, 022 64640364

Hotel Park Inn

Address: Next to New Panvel Bridge, Mumbai-Pune Highway,
Panvel, Navi Mumbai
Phone: 022 64591777, 022 27451888

Aangan
Address: 13/14, Tulsi Heights, Sector 5,
Plot 01, New Panvel, Navi Mumbai
Phone: 022 27482746

Aishwarya Pure veg

Address: Shree Shraddha Avenue, Sector 20,
Kamothe, Panvel, Navi Mumbai
Phone: 022 27430717, 022 27430718

Baker’s Treat
Address: 2, Riddhi Siddhi Housing Society,
Sector 3, New Panvel, Navi Mumbai
Phone: 022 64539386

Monginis
Address: 108, Shubham Complex,
Panvel East, Navi Mumbai
Phone: 022 27491316, +91 9867959720

Swad Veg Treat

Address: 1 & 2, CIDCO Market, Sector 10,
Khanda Colony, New Panvel West, Navi Mumbai
Phone: 022 27455899, 022 69579885

Ketki Restaurant
Address: Shivaji Road, Near Dwarka Restaurant,
New Panvel, Navi Mumbai
Phone: 022 27451552
27
Hotel Suruchi
Address: 165, MCCH Society, VB Phadke Marg, Panvel, Mumbai
Phone: 022 27462207, 022 27481062

New Shiv Sagar

Address: Plot 67, Susheel Residency,
Thana Naka Road, Old Panvel, Navi Mumbai
Phone: 022 65565564, +91 9167151912

Dhanush Fine Dine

Address: 1/2,101 Neel Enclave, Plot 1, Sector 9,
Khanda Colony, Panvel, Navi Mumbai
Phone: 022 27456974, 022 27456975

Shubham
Address: C Wing, Sector 11, Shubham Complex,
Plot 1 & 3, New Panvel East, Navi Mumbai
Phone: 022 27491164, 022 27491165

Punjabi Dhaba
Address: Shop 2, Plot 9, Yash Plaza, Sector 9,
Kamothe, Panvel, Navi Mumbai
Phone: 022 65544226

Pallavi Avida
Address: Site 6, Sector 10 E, Roadpalli,
Kalamboli Link Road, Panvel, Navi Mumbai
Phone: 022 65821111, 022 65812222

Scottish Blue
Address: Near Rajeev Gandhi Udyan, Bhagatwadi
Sukhpur, New Panvel, Navi Mumbai
Phone: 022 65222345

Hotel Sai Shraddha

Address: 15/16, Shubham Commercial Complex,
Sector 11, Matheran Road, New Panvel East, Navi Mumbai
Phone: 022 27455575, 022 27482894

Hotel Panvel Palace

Address: 126/1 B, Bombay Pune Highway,
ST Debot, Panvel, Mumbai
Phone: 022 27456141, 022 27456149

Dwarka Pure Veg.

Address: 161, Shivaji Road, Near Panvel ST Depot,
Dist Raigad, Panvel, Mumbai
Phone: 022 27482225, 022 27482227

28
 CHAPTER2.RESEARCHMETHODOLOGYOFGSTIN RESTAURANTS

OBJECTIVES.
SCOPEOFSTUDY.
DATACOLLECTION.
LIMITATIONOF STUDY.
HYPOTHESIS

OBJECTIVES:

ToknowabouttheGST rates.

TounderstandtheadvantagesanddisadvantagesofGST. To

help to overcome the problems which may arise .

29
Tounderstandhowtoidentifyfraudsinrestaurantsandtoovercomethem. To

know the composition scheme of small business.

Toknowdifferentratesapplicablefordifferentbusiness. To

charge fixed rate of tax on foods and beverage.

SCOPEOFSTUDY

There are many scope of study in gst in restaurants like in the field of accounts, in the field of
auditing, payment method, taxation, etc.

DATA COLLECTION

For collecting data I have been using Questionaire Method. Questionaire means a set ofquestions
have been made. I have made certain questions in whichthe customers have given their opinion
about Impact of GST in Restaurants. Their views on GST and its rates have been given .As well
as the question were set for the manager of restaurant though he has answer some question and
some question were not answered because of the secrecy of that restaurant.

LIMITATIONSOFTHESTUDY

Their where not so limitation while studying this topic. But I feel their where some question
which were not answer. It was difficult to take some information from hotel staff about
thistopic.WhilesomecustomerswherefeelingawkwardwhenIwasaskingaboutthetopic.Thisare some
limitation that I found while studying this project.

HYPOTHESIS

After talking to people and seeing their views I have found that some people most often avoid
going to restaurants because of GST rates. They say restaurants charge high amount .So they
very rarely visit restaurants.Whereassome people still prefer going to restaurants.They are
affected by GST rates. This may be because their may have high income. Some people say they
are affected by GST rates whereas some say they are not affected by the rates. This show about
null hypothesis as well as alternativehypothesis.

30
 CHAPTER3.GSTREVIEWIN RESTAURANTS

WHATISRESTAURANT,WHATTHEYDEALWITH.

HISTORYABOUTRESTAURANTS

TYPESOF RESTAURANTS

GSTONHOTELSAND RESTAURANTS

GSTINRESTAURANT SERVICES

GSTREGISTRATIONFORRESTAURANTS

OTHERIMPORTANTINFORMATIONFORGSTRESTAURANTS

IMPACTOFGSTONALCHOL&LIQUORSECTOR,GSTRATESON
ALCHOL & LIQUOR

GSTRATES ONFOODGOODS

31
GSTRATETOBELEVIEDONTAKEAWAYFOODINAC
RESTAURANTS

GSTRATESONEATINGOUT

IMPACTONRESTAURANTBUSINESSOWNERS

GSTCOMPOSITIONSCHEMEFORRESTAURANTS

GSTRATESTRUCTURE

GSTRATESTRUCTUREFORRESTAURANTSININDIA

EATINGOUTGETSCHEAPERANEWGSTRATEFOR
RESTAURANTS

GSTRATECHARTASAPPLICABLETO RESTAURANTS

NATIONALRESTAURANTSASSOCIATIONOFINDIA

CHECKRESTAURANTBILLBEFOREYOUPAY.

HOWMUCHGSTISAPPLICABLEIFFOODIS
PACKED/PARCELED FROM AC RESTAURANT?

IMPACTOFGSTONRESTAURANTGOERS

WHATISRESTAURANT,WHATTHEYDEAL WITH

A restaurant is a place where cookedfood is sold to the public, and where people sit down to eat
it. It is also a place where people go to enjoy the time and to eat a meal.

Some restaurants are a chain, meaning that there are a lot of restaurants that have the same name
and serve the same food. McDonald's, Burger King, and Pizza Hut are examples of chain
restaurants that are all over the world. These restaurants servefast food, that is, inexpensive food,
prepared and served quickly. At some, you do not have to even get out of thecar to eat. You can
pay and get your order from a window. These places are called drive-throughs.

32
There are also chain restaurants that serve slightly more expensive food. They are called
fastcasual restaurants. Applebee's and Perkins are examples of this type of chain restaurant.

Haute cuisine or 'fine dining' is found in a guide, such as the Michelin Guide, the most famous
restaurant guide in the world. Their 3-star rosettes are given only to restaurants with the highest
standardsofcookingandservice.Interestingly,theGuidegivesmore3-starsto TokyoandKyoto than to
Paris, London and New York together. Traditionally, the restaurants of top hotels such as the
Hotel de Paris in Monte Carlo or the Hôtel Ritz Paris are the places recognized for fine dining.

MENU:

A menu is a list of dishes to be served at a meal. Menus have been around inEurope since the
18th century. There is a special need for them in Chinese cuisine because of the wide range of
dishes on offer. Menus have been discovered from the Song Dynasty in China.[1] In the larger
cities ofthe time, thevariety ofcuisinefromdifferent regions ledcaterers to createalistfortheir
patrons.

In restaurants, the modern menu, with dishes in a set order of courses, was invented by the great
FrenchchefEscoffier.[2] Usually there are two types of menu at a good restaurant: [3]

 tabled'hôte:asetmenuatafixedprice(prixfixée).
 àlacarte:awiderchoiceofitems,eachwithits own price.

Lesser establishments might offer a chalkboard, with the advantage that items can be rubbed out
or added on at short notice. Fish restaurants in particular depend on daily catches being supplied
or bought in the early morning. They usually list fish freshly bought (as opposed to frozen)

InAmericanrestaurantmanagement,"menuengineering"hasbecomeabranchofmarketing.

Buffet

Abuffetisaserve-yourselffood system.

Foodisplacedinapublicareawherethedinerschoosewhatthey want.

Buffetsarenowusualinmanyhotelsfor breakfast,andsometimes forothermeals. Theyarealso common at

social events, where people stand up to eat and talk.

Buffet restaurants usually offer all-you-can-eat food for a set price. Buffets usually have some
hot dishes. The term cold buffet (see Smörgåsbord) has been developed to describe buffets
lackinghotfood.Hotorcoldbuffetsusuallyinvolvedishwareandutensils,buta fingerbuffetis

33
designed for small pieces taken by hand, such as cupcakes, slices of pizza, foods on cocktail
sticks, etc.

The essential feature of the various buffet formats is that the diners can see the food and
immediately select which dishes they wish to eat, and usually also can decide how much food
they take. Buffets are effective forserving large numbers ofpeople at once, and are often seenin
institutional settings, such as business conventions Buffets grade into cafeterias when there is a
serving counter and the customer moves with a tray along a track.

FAST FOOD:

Fast food is the term for a kind of food that people eat from a restaurant, cafe or take-out where
food is prepared and served quickly.

The restaurants that sell fast food are called "fast food shops" or "fast food restaurants". Some of
the more common fast food restaurants are McDonald's, Wendy's, Burger King, Taco Bell, and
KFC.

HISTORYOFRESTAURANTS

RestaurantsinAncientTimes

The idea of selling food for profit existed during the earliest civilizations. It's no coincide the
growth of restaurants through history correlates with the growth of cities. The need for public
eateries was firmly established as far back as the Roman Empire and Ancient China. When
peasants and farmers brought their livestock and other goods to urban markets, often they
traveled for several days at a time and needed a place to eat and rest. This brought about the
earliest form of restaurants, the roadside inn.

Usually located in the middle of the countryside, inns served meals at a common table to
travelers. There were no menus or even options from which to choose. Every night was chef’s
choice.

Within city walls, where living conditions were cramped and many people did not have the
means to cook their own meals, vendors sold food from small carts or street kitchens, which is
still popular in many parts of the world. The meals they sold were usually precooked and
affordable, a forerunner to modern fast food. These early inns and taverns were more than just a
place to eat; they served an important social function by bringing people together.

34
RestaurantsintheMiddleAges

In Europe through the Middle Ages and into the Renaissance, taverns and inns continued to be
the main place to buy a prepared meal. In Spain, these establishments were called bodegas,which
served small savory Spanish dishes called "tapas." In England, food such as sausage and
shepherd’s pie were popular; while, in France, stews and soups were offered. All of these early
restaurants served simple fare commonly found in peasant or merchant homes.

Following Columbus’s voyage to the Americas in 1492, global trade increased, introducing new
foods to Europe. Coffee, tea, and chocolate were soon being served in public houses alongside
beer, ale, and wine. By the 17th century, while full meals were still typically eaten at home,
moderately well-to-do people would hire a a caterer or take their meals in a private salon, rather
than in the main dining room of a public house.

TheFrench RevolutionandtheRiseofFineDining

InFrancethroughouttheMiddleAges,guildshadmonopoliesonmanyaspectsofpreparedfood. For
example, charcutiers were the guild who prepared cooked meats for sale. If you did not belong to
that particular guild, it was illegal to sell cooked meat in any form. In 1765, a man named
BoulangeraddedcookedlambtoastewhesoldinhisshopneartheLouvre.Thecaterer’s guild sued him,
but Boulanger won the case. Over the next 20 years leading up to the French Revolution, more
shops like Boulanger’s began opening in Paris.

When Marie Antoinette and Louis XVI went to the guillotine, the old ways of French society
went with them. The guilds were swept away and many chefs employed in aristocratic, even
royal,householdsfoundthemselvesunemployed.Manyofthesedisplacedworkersopenedtheir own
restaurants in Paris, bringing with them a new way of dining. Delicate china,

cutlery,andlinentablecloths,alltrappingsofaristocracy,werenowavailable toawholenew
echelonofFrenchcitizens.Menusbecamemorediverse,offeringbothprixfixeandalacarte options.

Thoughpublichousescontinuedtoexist,theriseoffinedininginFrancewouldsoonspread
throughout Europe and into the New World.

Public gatherings over food and drink have long been a part of human society, as they offer a
place for people to come together for a meal and to socialize with others. Following the French
Revolution, fine dining restaurants expanded across Europe and to other parts of the world. In
theUnitedStates,therestaurantindustrywouldbecomeoneoftheleadingemployersduringthe 20th
century.

WORLD’SFIRSTRESTAURANT

35
The very first restaurant in the world was opened in Paris in 1765. A travern keeper,
MonsieurBoulanger, served a single dish – sheep’s feet simmered in a white sauce.

TYPESOF RESTAURANTS

1. Coffee Shop
2. SpecialtyRestaurants
3. GrillRoom
4. DinningRoom
5. Discotheque
6. NightClub
7. Bars
8. CasualDinning
9. FastFoodRestaurants
10. CafeteriaorCanteen
11. Dairyhotel
12. Food trucks
13. Food court.

COFFEEROOM

 Openfor24X7.
 Menushouldbeforeveryone(versatile menu).
 Quick service
 Needsveryless staff.
 Cheaperratesforthedishesbecausetheservicesarelimited.
 Theychargetaxesasperunitofcoffeemostly.

GRILLROOM

 Ingrillroomtheserve99%nonveg.
 Therewouldbeaglasspartitionbetweenthekitchen andtheguest area.

36
 Generallyopensatnight.
 Theychargetaxonoverall bill.

SPECIALTYRESTAURANT

 Thereislimited cuision.
 Asperthecuisiondécorandthemeisselected.
 Chiefsarespecialisedinsomespecificcuision.
 Theycharge18%taxifyouorderice-cream.

CONTINENTALRESTAURANTS

 Inthecontinentalrestaurantstheyprovidesilverservices.
 Asthenamedefinetheyservecontinental food.
 Clientswillbelessbecausetheychargemuchfortheir service.
 Theychargetaxesontotalbill

DININGROOM

 This isasmall restaurant.

 TheyprovideAmericanperplatedservice.
 Theychargeverylesspricefromthe guest.
 Provideverynormaldécortotheguest.
 Theychargeasper person.

CASUALDINING

 Theyarediningrestaurants,theyprovidecasualdining.
 Theymostlydealinunlimited food.
 Theypricingisalsolow
 Thetaxesareincludedinprice

DISCOTHEQUE

 Thisistheplacewherepeoplecandanceontheloud song.
 Therewillbedarklightandwooden flooring.
 Theycandisplaybar also.

37
 NIGHTCLUB

 Inthenightclubthereareliveperformance.
 Theyprovidesilverservicestotheguest.
 Theyprovidepropermealandlimitedmenu
 Theychargetaxondrinkyouorderthefoodis exempted
 Generallyopeninthenight.Thetaxesarechargeonticketofclub.

BARS

 Abaris aplace wherealcoholic drinkslike beer,wine,liquorandcocktails for

consumption are available.
 Thebarsareveryexpensiveplace
 Theycandisplayalcoholbottles.
 Generallyopenatnight.
 Theychargetaxondrinkyouorderthefoodis exempted

CANTEEN

 Canteenismostlyseenincollegeand office.
 Theyactlikenonprofitingmaking organisation(NPO).
 Sothereisnoincurredtaxinthepriceofcanteenfood.
 Forexample:R.A.D.A.Vcollege

DAIRYHOTEL

 Thistypeofhotelmostlydealwithdairyproductandvariousotherproduct.

 Thetaxesarechargedontheorderedof product.

FOOD TRUCK

 Theyservefoodthoughthetruckoutlet

 Thetaxesarechargeaccordingtothebill amount.

GSTonhotelsand restaurants

38
Fooding is one of those business segments which will never go “out of fashion”.According to
theNationalRestaurantAssociationofIndia’s2013IndiaFoodServiceReport,thecurrentsize
oftheIndianfoodserviceindustryis₹2,47,680croreandisprojectedtogrowto₹4,08,040
crore by 2018 at the rate of 11%. Accordingly, this segment has been under the radar of taxation
authorities since the inception. Goods and Service Tax (GST) applicability on restaurants has
always been the talking point. Businesses are still trying to understand the changes required in
their current systems to accommodate the new compliance model.

Firstly, let us check out what are the components of a bill that is furnished to us by a
hotel/restaurant:

 ValueAddedTax(VAT)–Erstwhile: Thisusedtobethetaxonthefooditemsthatyou had

ordered.
 Service Tax (ST) – Erstwhile: This used to be the tax charged on the services provided
by the restaurant/hotel.
 ServiceCharge:This neverwasorisatax.Thisisaselflevied chargebythehotels.

After the implementation of the GST, no separate VAT and ST are now charged. Rather, a
consolidated rate is now charged. The rates were shuffled quite a few times. The GST Council,in
its 23rd meeting in Guwahati, had slashed the tax rates, made announcements regarding
availability of Input Tax Credit.

AsummaryoflatestGSTsituationhasbeenmentionedbelow:

Rates:

Type of GSTRate
Restaurants/Hotels/Lodges
All restaurants 5% no ITC
Restaurantswithinhotels(room tariff 5% no ITC
<7,500)
Restaurantswithinhotels(room tariff 18%with ITC
>7,500 )
Outdoor catering 18%with ITC
Hotels& Lodgeswith tariffbelow Exempt
Rs.1000

 Liquor will attract state levies like VAT as it was kept outside the GST regime. Service
charge might still be levied by the respective restaurant/hotel.

39
Foodparcels(ortakeaways)willalsoattract5%GSTwithoutITC

InputTaxCredit:

The Ministry is of the opinion that since they did not pass on the ITC benefit to customers, the
hotels and restaurants will not be eligible for the benefit themselves.

Under the input tax credit, restaurants could claim an offset on the tax they pay on the final
productsbecauseofthetaxtheyhavealreadypaidoninput(essentiallyrawmaterials).Itroughly
amounted to 3-4 per cent of the profit.

With the government not allowing the same, some restaurants may now hike prices of the
products on the menu itself in a bid to compensate for the losses they are suffering with the
lowering of GST rates and withdrawal of input tax credit. Some of such units like McDonalds,
Lifestyle have also been sent notices recently.

ImpactonRestaurantBusinessOwners

Example:

OnMaterials Input:

Particulars Billing–Erstwhile Billing–GST (Rs.)

(Rs.)
Rice 1000 1000
Spices 300 300
Oil 200 200
TOTAL 1500 1500
VAT@5% 75 –
GST@ 5% – 75

Output Billing:

Particulars Billing–Erstwhile Billing–GST (Rs.)

(Rs.)

40
 TotalBill 5000 5000
[email protected]% 725 –
ST@ 6% 300 –
GST@ 5% – 250
TotalOutputTax 1025 250
Liability
InputCredit– 75 –
– –
-VATITC(from above)
-GSTITC

FinalOutputTax 650 –
Liability – 300 –
– 250
-VAT
-ST
-GST

TAXESBEFOREANDAFTERGSTINRESTAURANTS

BEFORE AFTER

i. VAAT i. CGST
ii. SERVICECHARGE ii. SGST
iii. SERVICE TAX
iv. FOODTAXABLE CHARGE

GSTINRESTAURANT SERVICES

The GST regime of indirect taxation has subsumed most of the indirect taxes levied on the sale
and purchase of goods and services in India. The price of numerous commodities and services
have been affected due to the multiple indirect taxes imposed. When it comes to the restaurant
business,therate of GSTonrestaurantshasbeenadebatable issue.Underthepre-GSTregime, the bill
of the restaurant included VAT, Services Tax and Service Charge. The particulars of a restaurant
bill before GST regimewere as follows:

41
Price of food Item: The price stated in the Restaurant’s Menu card is the price on which the
different taxes were calculated.

VAT:TheIndirecttaxleviedonfooditems ordered.

ServiceTax:Theindirecttaxleviedonservicesprovidedbyrestaurants.

Service Charge: This is not an indirect tax, but a charge levied by restaurants over and above
Service Tax. The amount of Service Charge charged by the restaurant was not included in tax
collected by the government.

RateofGSTonRestaurantBills

TypeofRestaurants Tax
Rate
Restaurants(StandAlone) 5%
without
Input The restaurant business is
Tax eligible to opt composition
Credit scheme under the GST law.
RestaurantbeingapartofaHotel(wherethe declared 5% However, the restaurant is
tariff of the accommodation is not exceeding without required to follow the
Rupees 7500) Input prescribed composition GST
Tax rules.
Credit
Restaurant being a part of a Hotel (where the 18% The rate at which
declaredtariffoftheaccommodationexceeds with restaurants are
Rupees 7500) Input required to pay GSTis
Tax fixed at a
Credit concessional rate of
RegularCateringatsayCompany premises 5% 5% which is to be
without levied on the turnover
Input subject to the
Tax following restrictions.
Credit
Outdoorcateringservice 18%
with
Input
Tax
Credit The Turnover of the
restaurant should not
exceedRs1.5Crores
(Rupees150lakhs).However,thislimit Rupees1Croreforspecialcategory States.
 The restaurant should not be engaged in any services other than restaurant subject to
certain exemptions.
 Therestaurantcan’tbeengagedintheinterstatesupplyofgoods

42
  Therestaurantcan’tsupplyanyitemsexemptunder GST.
 Therestaurantcan’tsupplygoodsthroughane-commerceoperator
 Therestaurantcan’tavailanyITC(InputTax Credit)
 Therestaurantcan’tcollecttaxesfromthecustomer

InadditiontothistheRestaurantoptingforCompositionSchemeisrequiredto:

 mention the words “composition taxable person, not eligible to collect tax” on the bill of
supply.
 mentionthewords‘compositiontaxableperson’oneverynoticeorsignboardattheir place of
business or additional place of business.
 RegularTaxPayerV/sCompositiondealer

Particulars RegularScheme CompositeScheme

Registration Threshold limit – Threshold limit –Rupees.
Rupees. 20 Lakhs 150 lakhs (1.5 Cr)

Business No restriction on RestrictedtoIntra-State

Territory supply of goods or Supply
services
Switching to The Compliance Oncethe limitiscrossed,
Compositionfrom procedure is high registrationunderregular
Regularor Vice provisions is compulsory
versa
Inputtaxcredit Eligible NotEligibletoavailITC
(ITC)
Businessthrough Supplier can supply Composition dealer
e-commerce goods through e- cannot supply goods
operator commerce operator through e-commerce
operator
CollectionofTax Eligible to collect Cannotcollecttaxfrom the
tax from the customer
customer
Taxinvoice Can issue a tax InsteadofTaxInvoice can
invoice for outward raise Bill of Supply
supply
GSTreturns Monthlyreturns Quarterlyreturns

GSTRegistrationforRestaurants
43
The Goods and Services Tax (GST) is a landmark reform in India’s indirect tax regime
that entered the Indian economy on 1st July 2017. Mostof the restaurants havealready begun
carryingoutwiththeimpact studiestogettheirbusinesstobeabletoadaptandaccommodate its
businesstoGSTtaxregime.Theexistingsystemhasagreaterscopeformanualintervention, but GST
aims to achieve a tectonic shift to a single digitized compliance set-up. Through the GST
RegistrationandImplementation,thetaxpayerswillpayoneconsolidatedtaxinsteadofthe
plethora of taxes including State Value-Added Tax (VAT), Central Excise, and
ServiceTax,EntryTaxorOctroiandafewotherindirecttaxes. Readindetail theimpact
oftheGSTon the restaurant business here.

Owners of the restaurant business are always hassled with the several taxes right from the
purchase of raw materials to creating the product to ultimately selling the final product to the
consumer. Once your turnover is more than the fundamental exemption limit, then your
restaurantsneedaGSTregistration.Beforemovingforwardwiththeprocedure,youmustknow the
following points:

GSTregistrationisstatespecific,soifyourrestaurantshaveoutletsindifferentstates,then you
need to have a separate registration for each state.
Ifyouhaveoutletsinthestateitself,thenyoudon’tneedtotakeseparateregistrationforeach outlet.

TheProcedureofGSTRegistrationforRestaurants

LetuslookattheprocessofGSTregistrationforyourrestaurant:

1. DocumentsRequiredforGSTRegistrationofRestaurants

ThedocumentsrequiredforGSTregistrationare-

 Photooftherestaurant owner/proprietor
 PictureofManagingpartner/designatedpartnerincaseofapartnership

Proof ofRegistration

 Partnershipdeedincaseofpartnershipfirm
 Noregistrationcertificaterequiredincaseofproprietorship

EvidenceofPrincipleplaceof Restaurant

44
  Ifyouowntheproperty,thenownershipdocumentlikeelectricitybill,tax
receipt/property tax receipt or registry documents of that place.
 Ifyouareonrent,thencopyofrentagreement/leaseagreementwithelectricitybillinthe name of
the owner.
 Ifyouneitherownthepropertynoronrent,thensubmitelectricitybillalongwiththe copy of
NOC (No Objection Certificate)

BankAccountDocuments

 The otherdocuments that are required related tobank bare-Scanned copyofbank

statement/bankpassbookorscancopyofcanceledchequecontainingName,bank
account no., MICR, IFSC and branch details including code.

2. GSTRegistrationforRestaurantBusiness

ThefollowingstepshavetobefollowedfurtheronceallthedocumentsrequiredforGST registration
has been procured.

 ApplyforRegistration:Firstly,youneedtoapplyforGSTregistrationinFormGST REG –
01.

Youwouldbethenaskedtouploadthedocumentsandsignthesamewithyourdigitalsignature.

 Verification of Documents: Once you apply, the department officer will verify your
application.Ifallthedocumentsarefoundtobeauthentic,thenhe/sheshallgrantyouthe
registration certificate, or else your application might be rejected after giving reasons.
 GrantofRegistrationCertificate:Thedepartmentshallgrantyoutheregistration
certificate then.

3. ApplicationofGSTTaxRatesonRestaurantBusiness

TheGSTtaxratehasbeendefinedasperthedifferentcategories oftherestaurantasexplainedat the

beginning of the article which is as follows:

 Category1:Supplyoffood/drinksintherestaurantwithoutACandwithoutthelicense to
serve liquor

GSTTaxrate:5%withoutinputtaxcredit(ITC)

 Category2:Supplyoffood/drinksintherestauranthavingACfacilityatanytimeduring the year

45
GSTTaxrate:5%withfullInputTaxCredit(ITC)

 Category3:Supplyoffood/drinksinanair-conditionedrestaurantin5starorabove- rated
hotels

GSTTaxrate:18%withfullInputTaxCredit(ITC)aboveratedhotels

Whiletheseweretheinitialholdings,GSTregulationswentthroughalotofamendments,and you can

find such changes here.

4. IGST,CGST,andSGSTtobeChargedbyRestaurantBusiness

ThecomponentsofDualGSTare:

a) CGST:CentralGoodsandServiceTax
b) SGST:StateGoodsandServiceTax
c) IGST:IntegratedGoodsandServiceTax

SinceIndiaisafederalcountry,boththeCentralandthestategovernmentshaveresponsibilities to
perform as per the Constitution.Therefore, a dual GST will be keeping with the Constitutional
requirement of fiscal federalism. In the case of the restaurant business, the sales are made within
the state, and hence CGST and SGST shall be charged accordingly. There will be a common e-
return for CGST, SGST, IGST, and Additional Tax.

5. FilingforReturnsUndertheGST

Under GST, the restaurant business is treated as par with any other business. As per the GST
returnsrules,threemonthlyreturnsarerequiredtobefiled.Herearethefollowingthreemonthly returns
which are expected to be filed:

 Returnno.1–OutwardReturn(SalesReturn):ThefirstreturnonGSTisthesalesreturn which is
required to be filed by 10th of the following month.
 Returnno.2–InwardReturn(PurchaseReturn):Thesecondreturnisfiledbefore15th of the
following month.
 Returnno.3–ConsolidatedReturn:Baseduponthesalesandpurchasereturn,the
consolidated return is also filed by 20th of the following month.
 Further,apartfromtheabovethreemonthlyreturn, GSTAnnualReturnhastobefiled by
31st December of next Financial year.

OtherImportantInformationfortheGST Registration

ReadtheadditionalrelevantinformationfortheGSTregistrationofrestaurants below.

46
1. InvoicesunderGST

AspertheGSTrules,everyinvoiceorreceipt issuedtothecustomerwillhavetobepresented before

the government and based upon that tax returns will be prepared and filed.

2. CompositionScheme

CompositionSchemeunderGSTismerelyanextensionBusinessesdealingonlyingoodscan
optforcompositionscheme.However,Servicesprovidershavebeenkeptoutsidethescopeof this
scheme. The restaurant sector taxpayers are allowed to choose the plan.
This holds true if your annual turnover is below Rs 75 Lakhs. Restaurants with an annual
turnoverlessthanRs75lakhswillbeabletoavailthecompositionschemeunderthegoods and
services tax (GST) regime and pay a flat tax of 5% to the current scheme under VAT law.

3. InputTaxCredit(ITC)forRestaurant Business

Aspertherecentrulingbythegovernment,theInputTaxCreditforrestaurantshasbeen withdrawn.

InputTaxCreditcanbedefinedastheavailingofcreditforinputtaxespaid.Restaurantsin hotels
that charge Rs 7500 per room are allowed are allowed to take input credit without any restriction
subject to specific guidelines. A restaurant owner would get credits for the taxes paid on the raw
materials purchased while computing the final indirect tax liability on the items that are collected
from the consumers.

Thefewmoreessentialconditionsthathavetobekeptinmindare:

 Thestockinvoiceshouldnotbemorethan12monthsold.
 Thedealershouldberegistered.
 Thestockistobeusedinataxablesupply.
 CreditisallowableunderGSTlaw

4. PlaceofSupplyforRestaurant Business

Thelocationofsupplyistheregisteredplaceofbusinessoftherecipient.ThePlaceofSupply under
GST is an essential factor after which levy of SGST, CGST & IGST will be determined as
your place of supply defines whether the transaction will be counted as intra-state(i.e.,
within the same state) or interstate (i.e., between two states) and then accordingly the
changeability of tax can be stated.

47
GSTregulation underwentalotofchanges.InNovember2017,whiletheentirecountryrejoiced
whentheGSTCouncildecided toreducetheGSTratesfrom18%to5%forallrestaurants along with the
Input Tax Credit withdrawal, there is a darker side of this provision that was very casually
ignored, know about them here.

AlthoughtheGSTaims tosimplifytheentire taxstructure,theregistrationandimplementation

oftheGSTcanbequitecomplex.ReadthisarticletofindoutaboutthecommonGSTmistakesmade by
restaurant owners and the penalty involved with the mistakes.

GovernmentClearsConfusionOnGSTRatesForRestaurants

In the wake of several consumers voicing their confusion on social media regarding GST rates
forrestaurantsandtherelationofthesametoVATandservicetax,thegovernmenthascomeout with a
clarification about GST rules for restaurants.

Thefoodorderedatrestaurantsattractstwotaxrates–12%and18%–dependingonwhetherif it is an
ACrestaurant or anon-ACrestaurant, and whether therestaurant has the license to serve alcohol
or not.

The12%and18%GSTratesincludebothCGST(CentralGST)andSGST(State GST).

 FortheGSTtaxrate of12%,6%isCGST andtheremaining6%isSGST.

 FortheGSTtaxrateof18%,9%isCGSTandtheremaining9%isSGST. The

12% GST rate is for

 non-ACrestaurants
 roadsideeateriesthatdon’tservealcohol,
 localdelivery restaurants.

The18%GST rateisfor

 therestaurantswithfullair-conditioning(bothwithorwithoutalcohol),
 non-ACeateriesthatservealcohol.

TheCBEChasalsoclarifiedthat“theactualGSTincidencewillbelesserduetoincreased availability
of input tax credit.”

SandeepSehgal,director-taxandregulatory atAshokMaheshwary&Associates LLP,told

NDTVthatmanyinputcreditsthatweren’tyetavailable,willnowbeavailableforutilising against
GST liability.

48
The tax department has also launched the app GST Rate Finder. Available on Google Play
platformforAndroidhandsets,theappenablesuserstofindtheapplicableGSTratesongoods and
services. To know more about how this app can be downloaded and used.

GovernmentLaunchesGSTRateFinderApp:

ThetaxdepartmenthaslaunchedtheappGSTRateFinder.AvailableonGooglePlayplatform for
Android handsets, the app enables users to find the applicable GST rates on goods and
services.The rates can also be accessed on the tax department’s website.

HereishowyoucandownloadGSTRatesFinderApp

1. OpenGooglePlayStoreonyoursmartphone.
2. Gotothesearchtabandsearchfor“GSTRate Finder”.
3. Selecttheappandpress“Install” todownloadtheapponyour phone.

HereishowyoucanusetheGSTRatesFinderApp

1. OpentheGSTRatesFinderapponyourphone.
2. Tofindoutthedetails aboutaproduct,writeitsnameinthesearchboxandclickenter.
3. Thiswillprovideyouwiththeallthedetailsrelated totheproduct.

Taxrates:

TaxRate-5%forRestaurants(withoutbarlicense)withturnoverlessthan75lacsandopting for
composition scheme. No Input Tax Credit Allowed

TaxRate-12%forNon-ACRestaurant(withoutbarlicense).FullInputTaxCreditAvailable. Tax Rate

- 18% for AC Restaurant (without bar license). Full Input Tax Credit Available.

TaxRate-18%forAC/NonACRestaurant(withbarlicense).FullInputTaxCreditAvailable. Tax

Rate - 18% for Outdoor Catering. Full Input Tax Credit Available.

TaxRate-18%forRestaurantsinsideafiveStarHotel.FullInputTaxCreditAvailable.

49
AlsobusinesseswithturnoverbelowRs.20lakhannuallywillbeexemptedfromGST.Forthe north-
eastern states, the exemption threshold is Rs.10 lakh.

ImpactofGSTonAlcohol&LiquorSector,GSTRatesonAlcohol&Liquor

Impact of GST on Alcohol & Liquor Sector, GST Rates on Alcohol & Liquor: Alcohol
sector is the second largest contributor of taxes to state government in India. Manufacture
of liquor meant for human consumption is subject to state excise duties and not central excise
duty.However,stateexcisedutieswillgetreplacedinGST. AndhraPradeshandTelanganaare
thehighestalcohol consumingstateinIndia.Thepopulationofthesestates isnotonlyaheadin
consuming Indian made foreign liquor (IMFL) but also gets high of country liquor.

IndirectImpact
State government will continue to levy taxes on alcohol, but central government has kept
portable alcohol and alcohol for human consumption, out of GST purview. Alcohol
manufacturers arestillclaimingthattheywillseeahitontheirmarginsduetoincreasetaxrates in input
goods and services.

PriceVariations

Prices of whiskey and wine are likely to be increased by 3% – 5%, while for beers they may
range between 12%-15%. Though liquor is exempted from GST, but major inputs required for
producingsaleablealcohollikeglassbottles,molasses,barleymaltanddenaturedalcoholwillbe taxed
between 18%-28%. Hence manufacturers will end up paying taxes on input services and goods
without obtaining any liability on sales. However, if the prices increases, the customers will
decrease which might affect the states’ revenue in horizon.

MarginalRelief

OnlysighofreliefisinrelaxationofGSTonsecond-handliquorbottles.Itisbecause,firmrelies on
second hand bottle as they have life span of seven time uses and cost only 33.33% of new bottle.

ProductPortfolio

Itisalsoexpectedthatcompanieswillseetheirmarginsindipontheircheapbrandsthatoperate on lower
margins than the mid-market and premium brands due to higher input taxes; this will get
stabilized once cost is passed to the end consumer which may take 6 months period.

50
PoliciesPressure

industry has already taken a lot of hits due to demonetization and the highway ban. State
government has also lost their ration of revenue collections. In that This case if State
Governmentdoesnotcomeupwithappropriatedirections,thencompanieswillhavetoand bound to
shoot their prices

Expensiveforendconsumers

Manufacturers of alcoholic beverages for human consumption obtain the raw materials (Extra
NeutralAlcohol(ENA)/GrainNeutralSpirit(GNS)/ConcentrateofAlcoholicBeverage)either
through captive manufacture or by way of purchase from third parties in India or they import it
from other countries. As the finished product will be kept outside GST regime, it will not only
have negative impact on the state revenues but also makes the end product expensive and thus,
drive the consumers to find ways and means to resort to spurious products

Second-handBottleBoon

Some of the alcohol – beverages manufacturers use their own restricted patented bottles, which
may be used 5-7 times by the same manufacturer.Presently, many States impose a lesser VAT
rate with some states like imposing the standard VAT rate on glass bottles taxable against the
VATonthefinishedproductsoldwithinthestate.Theusedglassbottleswhicharepurchasedby brewers /
spirits manufacturers from used bottle dealers are again taxed at the lower/ standard VAT.

In GST, each re-use / re-supply is likely to attract GST @ 18% with no possibility of credit as
alcoholisexcludedfromGSTbase.TheeffectiveGSTcostoneverybottlewillcometoaround 70% of
the purchase price of a new bottle.This too will increase the cost as levying VAT on used bottles
at the full purchase price leads to dual taxation, since the bottles have already been exposed to
VAT at the time of first purchase by the brewery or manufacturer from the bottle manufacturer.

GSTratesonfood goods

HSHSN Descriptionofgoodsandservicesoo GSTRA

CODE ds & Services TES=
2201 Water[otherthanaerated,mineral, NIL
purified,distilled,medicinal,ionic,
battery, de-mineralized and water
sold in sealed container]
2201 Non-alcoholicToddy,Neera NIL

51
 2202 90 Tendercoconutwaterputupin unit NIL
90 container and bearing a registered
brand name
2201 90 Iceand snow 12%
10
2201 90 Soyamilkdrinks 12%
10
2202 90 Fruitpulporfruitjuicebased drinks 12%
30
2202 90 Tendercoconutwaterputupin unit 12%
90 container and bearing a registered
brand name
2202 90 Beveragescontainingmilk 12%
30
2201 Waters, including natural or 18%
artificial mineral waters and
aerated waters, not containing
addedsugarorothersweetening
matter nor flavoured.
2207 Ethylalcoholandotherspirits, 18%
denatured, of any strength
2209 Vinegarandsubstitutesforvinegar 18%
obtained from acetic acid
2202 90 Othernon-alcoholicbeverages 28%
90
2202 10 Aeratedwaters,containingadded 28%
sugar or other sweetening matter
or flavoured
Beer, wine, rum, brandy, whisky, 28%
vinegar etc. fall under HSN code
chapter 22 of GST commodity
tariff schedule.The details about
GSTratechangesonsaleofBeer,
wine, rum, brandy, whisky,
vinegar etc.

GSTRatetobeleviedonTakeawayFoodinACRestaurants

The Goods and Services Tax (GST) was a landmark reform in India’s indirect tax regime that
entered the Indian economy on 1st July 2017.The GST aimed to achieve a tectonic shift to a
singular digitized compliance set-up. However, since its inception, it did bring in with itself a lot
of confusions, queries, and scepticism from the restaurant industry. The Government came up
withanotherGSTupdatewhereitstatedthatauniformGSTrateof18percentwillbe

52
charged on takeaways as well as food served from a Non-AC area of a restaurant if any of
its parts has a facility of air conditioning. Read more about the impact of the GST Bill on
therestaurants here.

18%GSTRateonTakeaway Food

Earlier the new GST regime, which was enacted from 1 July provided for levy of 12 percent on
food bill in non-AC restaurants.The Central Board of Excise and Customs (CBEC) through an
FAQ came up with a clarification on the GST rates. It stated that in a case of a restaurant-cum-
bars where the first floor is air-conditioned which is used for serving food and liquor while the
Non-AC ground floor which serves only food, the GST tax rate charged will be 18%.The CBEC
further said that if any part of the establishment has air conditioning facility, then
theratewillbechargedat18%forallsuppliesfromtherestaurantirrespective ofwhether the
supply is made from the ground floor or first floor. The CBEC further notified that tax has
to be charged at 18% on all supplies of food made from the takeaway counters on such
kind of restaurants.

ImpactoftheGSTUpdateontheRestaurant Business

The revision in the tax structure will have tremendous impacts on the restaurant business. To
minimize the loss of their business, the restaurants that have a Non-AC service area in their AC
restaurant should come up with different remedies.

 This revision in the tax rate may lead to severe loss of business for the takeaway as
customers won’t be willing to pay the tax rate of 18% as they are not taking any service.
 The customers will have to pay a tax rate of 18% when they are taking a Non-AC service
which was initially 12%. This will slow down and reduce the business for the
restaurants that serve food from a Non-AC area of a restaurant if any of its parts has a
facility of air conditioning.

 Therestaurantsmayhavetolowertheirpricesbyatleastarecognizablepercentage
andatthesametimepromoteitsothattheydon’tloseoutontheirvaluablecustomers.

Giving out complimentary to the customers can also help the restaurants in retaining their
customers.Usingthese remedies will minimize thesedrastic impacts if notcompletely neutralize
them.

Besides, such restaurants are also not eligible for the composition scheme as they are engaged in
supplying liquor and the composition scheme under GST can only apply to those restaurants that
deal in goods.

Update: According to the recent GST update by the government, the GST rates have been
slashed to 5% for both AC as well as Non-AC restaurants.

53
RestaurantBill

Asanendconsumer,wehardlypayattentiontoourfoodbillintheserestaurantsandmostofus are not

even aware of the components included in it.

Ifyourevisityourfoodbillfromthepre-GSTfine-dineexperience,you’llfindServiceTax, Service
Charge, VAT being added over and above the food value.

First,letusunderstandthecomponentsofthe bill:

 VAT:Thisisthe taxchargedonthefoodportionofyourbill.
 Servicetax:Thisisthetaxchargedontheservicesprovidedbytherestaurant.[Toavoid
unnecessary complications government had already bifurcated the service portion and
food portion and charge taxes accordingly.]
 ServiceCharge:This isachargeappliedbytherestaurants andnotbythegovernment.
THISISNOTATAX.Itshouldnotbeconfusedwithservicetaxasthisisanincometo the hotels.
Service tax is not an income and merely a tax collected from you and submitted to the
government.

However,theratesunderGSTarevastlydifferentthanwhatyouwouldfindbeforethetax policy
change. Let us look at these changed rates below.

GSTRatesonEatingOut
TypeofRestaurants GSTRate
All restaurants 5% no ITC
Restaurantswithinhotels(room tariff 5% no ITC
<7,500- 5% without ITC
Restaurants within hotels (room 18%with ITC
tariff>7,500)still18%withITC
Outdoor catering 18%with ITC

IntheGSTregime,theServiceTaxandVATamountwillbesubsumedintoonesinglerate,but you may

still find service charge doing rounds on your food bill.

Belowwehaveprovidedahigh-levelcomparisonofhowyourfoodbill willlookpreandpost- GST

54
So, at a standard rate of 18% under GST, a consumer will save around Rs. 55 on a transaction
valueofRs.2,200.Here,wehaveassumedthatVATisapplicableat100%ofthevaluewithout
anyabatement. Furthermore,ifweseetheeffectiverateoftaxunderVATregime, itsumsupto around
20.5% which will come down to 18%.

ImpactonRestaurantBusiness Owners

PARTICULAR BILLING UNDER BILLINGUNDERGST

CURRENTREGIME REGIME

55
 RICE 30 30
DAL 20 20
SWEAT 50 50
TOTAL 100 100

TAXES 30 9

PROFIT 70 91

Dueto theintroduction ofGSTthe restaurant ownerisearning goodamountofprofit.This isthe

impact of GST to the restaurant owner.

Thus we can fairly conclude that GST will bring reasons to rejoice for both consumers and
restaurantownersunderthenewregimeandwewillhavemorereasontoexplorethenewfood joints in
our neighbourhood and pamper our taste buds.

Non-air conditioned establishments: The establishments that don’t serve alcohol will charge
GSTat12%(CentralGSTat6%andStateGSTat6%)whiletheonesthatdoservealcoholwill charge 18%
GST (9% CGST and 9% SGST).

Air conditioned, partly air-conditioned, five-star: These establishments will charge GST at
18%(9%CGSTand9%SGST)regardlessofthealcoholavailabilityforpatrons.Sothisbrings the tax
on restaurant outings down from 20.5% to 18%.

GSTCompositionSchemeforRestaurants

The GST Composition schemegives asimple and easy technique for organizations to keep up
with GST Compliance. Small business enrolled under this scheme can pay tax at a fixed
percentageoftheirturnovereachquarterandfilequarterlyGSTReturns.Inthismanner,small
businessesenlistedunderthisschemewon’tberequiredtofilemonthtomonthGSTreturnsor

56
remitmonthlyGSTpayments.Inthisarticle,wewilldiscusstheapplicabilityof compositionscheme
for restaurants.

RegistrationforRestaurantsunderCompositionScheme

 RestaurantshavingayearlyturnoverofuptoRs.75Lakhsareeligibleforregistration under
the Composition Scheme
 Restaurants falling in the states of Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram,Nagaland,Sikkim,Tripura,HimachalPradeshandhavingayearlyturnoverof up to
Rs. 50 Lakhs can be registered under this scheme.

ConditionsforregistrationunderCompositionScheme

Thefollowingconditionsmustbesatisfiedbytherestaurantsforregistrationinthecomposition
scheme:

 TheRestaurantshouldnotbetemporaryorseasonal.
 Forthepurchasesofgoodsandservicesfromanunregisteredsupplier,GSTonreverse charge
basis must have been paid by the restaurant.
 Nointer-stateoutwardsuppliesofGoodscanbemadebytherestaurant.
 Supplyofgoodscannotbemadethroughanelectroniccommerceoperatorwhois
required to collect tax at source.
 RestaurantscannotbeinvolvedinthemanufactureofIceCream,EdibleIce,PanMasala,
Tobacco and its substitutes.

PaymentsforRestaurantsunderCompositionScheme

RestaurantsregisteredundertheCompositionSchemewillhavetopaythetaxesattherateof5% of yearly
turnover which is divided into 2.5% as SGST and 2.5% as CGST. Yearly turnover of the
restaurant will be calculated based on their turnover and will include value of all taxable supplies
exempt supplies and exports made by the individual with the same Permanent Account Number
(PAN), but exclude inward suppliers under reverse charge and Central, State/ Union Territory
and Integrated taxes and cess.

InvoicingforRestaurantsunderCompositionScheme

Restaurantsregisteredunderthecompositionschemewillhavetoissuea billofsupplyasthey are not

allowed to issue a GST Tax invoice or collect GST. In the Bill of supply, rate per quantity and
taxable value is specified.

Moreover,restaurantsshouldmentionthewords“compositiontaxableperson,noteligibleto collect
tax on supplies” on top of their bill issued.

ReturnFilingforRestaurantsunderComposition Scheme

57
Restaurants registered under the composition scheme needs to file quarterly returns through
FORM GSTR-4 on GSTN common portal by 18th of the quarter month. For example, returns
madeduringthemonthofOctober2017-December2017isrequiredtobefiledby18thJanuary 2018.

NOTE: Restaurantsopting forComposition Scheme underGSTwill notbeeligible totake input

taxcreditoninputsupplies.Therefore,withallthepointsexplainedaboveitisrecommendedfor
therestaurantownerstoconductadeepanalysis fortheirbusinessbeforeswitching oroptingfor the
Composition Scheme under the GST.

RestaurantsUnderGSTCompositionScheme

UpdatedonOct03,2018-11:11:42 AM

GSTratesforrestaurantshavebeenamatterofalotofdiscussionsandtheratesonthesame have
undergone a series of change at 28th GST Council meeting.

Inthiswriteupwewilltryandgiveapictureofthetaxoptionsavailableforrestaurantsunder GST:

1. GSTRatesonRestaurantBills

TypeofRestaurants GST Rate

StandAloneRestaurants 5% no ITC
RestaurantsformingpartofHotelswherethedeclaredtariffoftheaccommodation does
5% no ITC
not exceed Rs 7500
RestaurantsformingpartofHotelswherethedeclaredtariffoftheaccommodation 18%with
exceeds Rs 7500 ITC
RegularCateringatsayCompany premises 5% no ITC
18% with
EventCateringOutdoorcatering
ITC

2. GSTCompositionSchemeRules

RestaurantsarerequiredtopayGSTataconcessionalrateof5%ontheturnoverunder Composition
Scheme subject to following restrictions

 TurnovernottoexceedRs1.5Crores(Rs1Croreincaseofspecial categoryStates)

58
  Shouldnotbeengagedinanyservicesotherthanrestaurant(specialexceptioncarvedout for
services like interest and exempt services) 

 Restaurantcannotmakeinter-stateoutwardsupplyofgoods

 CannotsupplyanyitemsexemptunderGST.

 Theycannotsupplygoodsthroughane-commerce operator

 Restaurantscannotavailanyinputtaxcredit

 Theycannotcollecttaxesfromthe customer

3. RegularTaxPayerV/sCompositiondealer

Particulars RegularTaxPayer CompositeTax Payer

Registration Thresholdlimit–Rs. 20L Thresholdlimit –Rs.1.5Cr

Territoryof Business Norestrictionon supply LimitedtoIntra-StateSupply

Switch from Regular to Complianceprocedureis Once crosses the limit, compulsory
CompositionorViceversa high registrationunderregularprovisions
Inputtax credit Dependsonthecategory Notentitledtoavail thecredit
Businessthroughe- commerce Can supply goods Cannotsupplygoodsthroughe-
throughe-commerce commerce
Taxcollection Allowedtocollecttax from Cannotcollecttaxfromthebuyer
the buyer
Taxinvoice Canraiseataxinvoice for CanraiseBillofSupplyinsteadof Tax
outward supply invoice for outward supply
GSTreturns Monthly–GSTR1& Quarterly–OnlyGSTR4
GSTR 3B

4. IdentifyRestaurantunderCompositionScheme

 Restaurantsoptingforthecompositionschememustmentionthewords“composition
taxable person, noteligible to collect tax onsupplies” on the top ofthebill of supply. 
 Theymustalsomentionthewords‘compositiontaxableperson’oneverynoticeor
signboard prominently displayed at their place of business. 

59
5. BenefitstoRestaurantunderGST

 Compliancerequirementunderonelawinsteadofmultiplelaws

Exciseonthemanufactureofpastries,servicetaxonaccommodationandrestaurant,VATon
restaurant, luxury tax on renting of rooms and entertainment tax on ticket events.

 CreditofGSTpaidonprocurements

Entry Tax paid on machinery, CST on interstate purchases and excise paid on procurement of
furnitureandpackagedfoodswerenotallowedascredittorestaurantowners.WithGST,allthe taxes
paid on such procurements are allowed as credit unless they are required to pay taxes at a
concessional rate

 Optiontopaytaxesunderthecompositionschemeat5%iftheturnoverdoesnotexceed Rs 1.5
Crores
 ConcessionalRateof5%(withoutinputtax credit)
 Creditonfoodoroutdoorcateringifusedinasimilarlineofbusiness The

CBEC also explained the tax rates under the composition scheme: 

GSTrate ofComposition
Traders Manufacturers Restaurants
1% 2% 5%

 Inservicesector,CompositionSchemeisavailableonlyforonesector- restaurants
 Thecompositionschemeisnotavailableformanufacturersoftobaccoandmanufactured
tobacco substitutes, pan-masala and ice-cream, and other edible ice, whether or not
containing cocoa
 Thedealerswhooptforcompositionschemehavetofileonlyonequarterlyreturnwith details
of total turnover
 Invoicewithdetailsarenotnecessaryandthebillofsupplywillsuffice
 SmalltaxpayersarenotrequiredtogiveHSNcodeintheirreturns
 However,inthis option,noinputtaxcreditcanbetakenorpassedon
 Withonlineregistration,return,payment,refundandotherprocesses,delaysand
discretion would be reduced 
 Reducedcomplianceburden
 SpecialdispensationforjobworktohelpjobworkersintheGSTregime

60
 GSTRate Structure

 GoodsandServicesTax(GST)Billhasbeenstirringstormsandspewingdebatesoverits impact
on restaurants and its customers. As per the final proposed GST Bill, a four-tier GST rate
structure- 5%, 12%, 18% and 28% has been set, where tax is levied at multiple rates
ranging from 0 percent to 28 percent. Essential items including food, which constitutes
about half of the consumer inflation basket as well as major foodgrains have been
exempted from the GST and will be taxed at zero rates. As per the recent update
fromGSTCouncil,thenewGSTRateinIndiaisfixedtobe5%forallRestaurants.Read in detail
all you need to know about the GST Bill and how it impacts the restaurantbusiness here.

 While it was earlier said that the impact of GST seems to be neutral on the restaurant
industry,withthetaxatconsumerendcomingdownfrom30%tothestandardrateof5%
andthewithdrawalofInputTaxCredits(ITC),itseemstoaffecttherestaurantindustryin a
negative manner. Although dining outgets cheaper, but for restaurants, managing costs is
becoming a herculean task.
 UnderthenewGSTratestructureannouncedbytheFinanceMinisterArunJaitley,
restaurants will be taxed on the basis of their turnover and whether or not the
establishment is AC or Non-AC. Read how the new GST rates affect the
restaurantbusinesshere. 

 ImpactofGSTRateStructureonRestaurantFood Costs
 Theoverallfoodcostoftherestaurantkitchenhas decreasedunderthenewGSTregime. Edible
oil, tea, coffee and spices which were taxed at 3%-9% have dropped to 5% while goods
taxed at 9-15 percent are now taxed at 12%. Items that presently fall in the 15-21 percent
range have dropped to 18%, thus affecting the overall food cost.
 The GST rate structure is lower than the previous tax rates with items of mass
consumption such as foodgrains taxed at 5% as opposed to the previous 6%, while
processed food is charged at 12% as opposed to the previous 15%. Alcohol and aerated
drinksthatcomeundertheLuxurycategorywillalsoattractanadditionalcessalongwith the tax
of 28%.
 Alcohol falls under the State Tax and Excise, and is hence outside of the GST.
However,theimpactoftheGSTmaystillcausethepriceofalcoholtoshootup. 
 Food cost, on an average, represents 25-40 percent of the restaurant cost which is
followed by labor cost that represents about 25-35 percent.There is no other cost in the
restaurantcoststructureashighasthefoodcost;hence,restaurantsshouldaimatkeeping their
food cost between 28-35 percent of their total operating budget. Hence, a reduction the
food cost is likely to benefit the hospitality industry. 

61
ImpactofGSTRateStructureonRestaurantBills

TheGSTratestructurespellsgoodnewsfortherestaurantsasthemultiple taxeshave
beenremoved,resultinginreducedbills.Cheaperbillsaresuretoattractcustomersandwould result in
an overall increase in business.

“Therestaurantindustryhasbeenburdenedwithhighandmultipletaxations.NRAIhasbeen
advocating for reduction/simplification of the same. We welcome the Centre’s move

fortheintroductionofthismuch-awaitedreform.”–RiyaazAmlani,president,National
Restaurant Association of India.

auniform5%taxStructureonBothac&NON-ACRestaurants willdefinitelyhelpin
rationalising the tariffs across restaurants in India. but the restaurant sector seems
discontent with the withdrawal of Input Tax Credit(ITC) As the costs will go up.

GSTRateStructureforRestaurantsinIndia

HOTELTYPE TAXRATE
OneStar(NON A/C) Overall12%(6%CGST,6%SGST)
TwoStar(NONA/C) Overall12%(6%CGST,6%SGST)
ThreeStar(A/C) Overall18%(9%CGST,9%SGST)
Four Star(A/C) Overall18%(9%CGST,9%SGST)
FiveStar Overall28%(14%CGST,14%SGST)
Ifyouorderice-cream Overall18%(9%CGST,9%SGST)onlyinfive star
hotel
SMALLRESTAURANT-5%

EATINGOUTGETSCHEAPERANEWGSTRATEFOR
RESTAURANTS

Eatingouthasbecomemarginallycheaperfromasconsumerswillnowhavetopaylesstaxon food
served in restaurants.

Last week, the GST Council cut GST rates for all restaurants, except the ones located within
hotelswithroomtariffsofRs7,500andaboveandoutdoorcatering,to5%.Earlier,thelevywas
18%forair-conditionedeateriesandthosewithliquorlicencesand12%fornon-air-conditioned
restaurants.

However,foodbillsmaynotcomedowninlinewiththeexpectationsofconsumersasthe government
has withdrawn input tax credit for restaurants where 5% GST is applicable.

62
Undertheinputtaxcredit,restaurantscouldclaimanoffsetonthetaxtheypayoninputs (essentially raw
materials) against the tax on the final products.

AccordingtoestimatesbyFederationofHotelsandRestaurantsAssociationofIndia(FHRAI), input
tax credit accounts for 3-4% of profit of a restaurant.

Withtheinputtaxcreditoutofthesystem,restaurantsarenowlikelytoincreasethemenuprices to adjust
the tax they would pay for buying raw materials.

However,consumersarestilllikelytobenefitastheyhadtopay18%GSTearlier.Thatmeans for a
menu price of Rs100, a consumer had to pay Rs118 after tax is added.

Under the new GSTslab, assuming arestaurant decides to pass on the inputcostburden to the
consumers,themenupricewouldgoupbyanestimated10%makingitRs110.With5%GST,
consumer will now have to pay Rs115.50 which is still cheaper.

“ThenewGSTrateisdefinitelybeneficialfortheconsumer.Andthereisthefeel-goodfactorof lower
GST. So, the propensity of eating out will be higher," said Rahul Singh, vice-president,
NationalRestaurantAssociationofIndia.SinghisalsofounderandCEOofrestaurantchainThe Beer
Cafe.

Rating agency Icra estimated that dining out should get 7-13% cheaper for consumers.
AccordingtoIcra,restaurantsusedtogetinputcreditonproductslikeunpackagedgrains, poultry,
seafood and vegetables which are exempt from GST.

InabriefingaftertheGSTCouncilmeetingon10November,financeministerArunJaitleysaid the
council had decided to do away with the input tax credit as benefits are not being passed on to
consumers. “Since they did not pass on the ITC (input tax credit) benefit to customers, they will
not be eligible for the benefit themselves," Jaitley said.

Ontheotherhand,theabolitionofinputtaxcreditmayleadtorestaurantsdealingwithvendors that are

not GST registered.

“Theindustryisalreadystruggling.Andthismakesthingsdifficult.Doingbusinesswithvendors
without bills or invoices can’t be ruled out. With input tax credit gone, there is no incentive of
buyingfromGST-registeredvendors.Nowitmakesmoresensetobuyincashwithoutbills.This will at
least help saving taxes on inputs," said a restaurant owner asking not to be named.

The food services market in India is projected to grow to Rs4.98 trillion by 2021, expanding at
anannualaveragerateof10%,fromRs3.09trillionin2016,accordingtotheNRAI-Technopak report.

However,footfallsatrestaurantshavedroppedanestimated30%afterimpositionof18%GST on 1
July.

63
This means consumers would have to shell out more or less depending on whether they are
visitingarestaurantwithairconditionerorjustaregularnon-acfoodjoint.Theservicetaxrates at
restaurants in 5-star, 7-star hotels will be much higher at 28 per cent.

Similarly, the GST Council decided on different tax rates depending on the type of hotels. The
GST on hotels and lodges which charge between Rs1,000 and Rs 2,500 will be 12 per cent.
While,theGSTonhotelroomsinthepricerangeofRs2,500-Rs5,000willbe18%.Forlodges and hotels
cheaper than Rs 1,000, the GST is set at 5 %.

Hereisa lowdownonthenewrates:

 RestaurantswithaturnoveroflessthanRs50lakhwillbeleviedataxrateof5per cent.
 Non-acrestaurantswillhavea12%tax rate.
 ACrestaurantswillhavetoshellout18%tax.
 Alsofive-starrestaurantswillhavetosubmitaluxurytaxof28 percent.
 Hotels,lodgeswithtariffslessthanRs1,000willbetaxedat5%.
 HotellodgeswithtariffsbetweenRs1,000-Rs2,500willbecharged12%tax
 HotellodgeswithtariffsbetweenRs2,500-Rs5,000willbecharged18%tax.

GSTRateChartasapplicabletoRestaurants

Particulars Post amendment Before

i.e., From amendment i.e.,
th
15 November, Before 15th
2017 November,2017
GST Input GST Input
Rates Tax Rates Tax
Credit Credit
Non-air Don’t 5% Not 12% Available
conditioned serve Available
establishments alcohol
that Serve 18%
alcohol
Air-conditionedrestaurants 18%
(regardless of alcohol
availability)
Takeaway 5% Not
Available
Restaurants Declared 5% Not
withinhotels Room Available
with tariff
<7,500/-
Declared 18% Available
Room

64
 tariff>
7,500/-
Outdoor catering 18% Available

Notes:

♠GSTratewillnotdependnowonwardswhetherrestaurantisAirconditionedorNon-Air conditioned,
serving alcohol or not.

♠Postamendment,restaurantswouldbedividedinto3categories

(i) Stand-alonerestaurants

(ii) Restaurantsinhotelpremises

(iii) Outdoor catering

NATIONALRESTAURANTSASSOCIATIONOFINDIA
AccordingtotheNationalRestaurantAssociationofIndia’s 2013IndiaFoodServiceReport,the current
size of the Indian food service industry is ₹2,47,680 crore and is projected to grow to
₹4,08,040croreby2018attherateof11%.Thisgrowthisfurtherfueledbythegrowthofthe great Indian
middle class. Rapid urbanization, growing awareness of western lifestyles, more women
joining the workforce, and higher disposable income were some of the factors that contributed
to the growth of the restaurant industry. As a result, we find ourselves waiting in queues in
most of the restaurants during the weekend.

65
IndianFoodServiceIndustry

Asyoucanseeabove,thenumberslookpromisingfortherestaurantandfoodindustryinthe days
following GST.

UnderstandingYourRestaurantBill
Asanendconsumer,wehardlypayattentiontoourfoodbillintheserestaurantsandmostofus are not
even aware of the components included in it.

Ifyourevisityourfoodbillfromthepre-GSTfine-dineexperience,you’llfindServiceTax, Service
Charge, VAT being added over and above the food value.

First,letusunderstandthecomponentsofthe bill:

 VAT:Thisisthe taxchargedonthefoodportionofyourbill.
 Servicetax:Thisisthetaxchargedontheservicesprovidedbytherestaurant.[Toavoid
unnecessary complications government had already bifurcated the service portion and
food portion and charge taxes accordingly.]
 ServiceCharge:This isachargeappliedbytherestaurants andnotbythegovernment.
THISISNOTATAX.Itshouldnotbeconfusedwithservicetaxasthisisanincometo the hotels.
Service tax is not an income and merely a tax collected from you and submitted to the
government.

However,theratesunderGSTarevastlydifferentthanwhatyouwouldfindbeforethetax policy
change. Let us look at these changed rates below.

CheckRestaurantBillBeforeYouPay.
66
Next time you dine at a restaurant, do check your bill to see if the proper GST or goods or
services tax rate has been levied. Thetax department has comeout with clarifications on rates of
GST for restaurants. The clarification comes in the wake of many people flooding the social
media,seekingclarityoverthenewtaxregime.Thegovernmenthasalsolaunchedanapp,called GST
Rate Finder, to help people find out the GST rate on the particular goods/services. GST, which
came into force from July 1, replaced a multitude of central and state taxes including VAT,
service tax and cesses.

Food served at restaurants attract tax at two rates under GST - 12 per cent and 18 per cent -
dependingonwhetheritisanACrestaurantorwhethertherestauranthasthelicencetoserve alcohol.

It should also be noted that the GST rates of 12 per cent and 18 per cent include both CGST
(CentralGST)andSGST(StateGST).FortheGSTtaxrateof12percent,itissplitat6percent Central GST
(which goes to the Centre's kitty) and 6 per cent State GST (which goes to the

state'skitty).Sohappensforthe18percentGSTrate,whichissplitat9percentCentralGST and 9 per

cent State GST.

The tax department has also clarified that "the actual GST incidence will be lesser due to
increasedavailabilityofinputtaxcredit."Manyinputcreditswhichwerehithertonotavailable would
be available now to be utilised against GST liability, says Sandeep Sehgal, director-tax and
regulatory at Ashok Maheshwary & Associates LLP.

IthasalsobeenclarifiedthatrestaurantsuptoanaggregateturnoverofRs.75lakhthatoptfor the
composition scheme will charge GST at the rate of 5 per cent.

The lower limit of Rs. 50 lakh is applicable for the states of Assam, Arunachal Pradesh,
Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim and Himachal Pradesh, the tax
departmentsaid.(RestaurantswithannualturnoveruptoRs.75lakhcanoptforthecomposition scheme,
which enables them to pay tax at a flat rate without input credits.)

Non-ACrestaurantsservingnoalcohol

Thetaxdepartmentsaidrestaurantswithoutair-conditioninginanypartthereofandnotserving liquor
will pay GST at the rate of 12 per cent.

ACrestaurantsorthoseservingalcohol

Restaurantswithpartialorfullair-conditioningorthoseservingliquorwillattractGSTrateof18 per cent.

67
Pre-packedfood

Therateoftaxonparcelofpre-packedandpre-cookednamkinsoldfromrestaurantswillattract
taxat12percent.Also,incaseoffoodparcelcookedasperorder,GSTrateswillbeapplicable according
to service of such food in the restaurant, it noted.

The tax department has also launched the app GST Rate Finder. Available on Google Play
platformforAndroidhandsets,theappenablesuserstofindtheapplicableGSTratesongoods and
services. The rates can also be accessed on the tax department's website.

1. Taxmanclarifies onratesofGSTfor restaurants

2. Foodservedatrestaurants attracttaxattworatesof12%,18%underGST
3. GSTratesforrestaurantsincludebothCGSTandSGST

HOWMUCHGSTISAPPLICABLEIFFOODISPACKED/
PARCELED FROM AC RESTAURANT?

AsfoodispackedfromanACrestaurant,GSTwillbeapplicable@18%onsuchfoods.It doesn’t
matter if the food is served at the restaurant or parceled.

WhatistherateofGSTonservicecharge component?

Whatever GSTrateisapplicableontherestaurant,thesamerateshallbeapplicabletothe service

charge component and no different GST rate shall be applicable. For example:

 IftherestaurantisneitherAirconditioned norliquorisserved,thenGSTrateis12%.
 IfeitherliquorisservedorACfacility isthere,thenGSTrateis18%.
 Iftherestaurantisinthefive-starhotel,thenGSTrateis28%.

GSTonservicechargecalculationwithexample

MrAwenttoarestaurant inDelhiandorderedfoodalongwithliquor.Afterhavinghisdinner, he asked

for a bill. His bill was as under:

 Food Rs.500

68
  LiquorRs.1000
 ServiceCharge@10%Rs.150.

KindlyadvicehowGSTshallbecalculatedinabovecase?

A.GST in India is not applicable on alcohol made for human consumption and therefore,
GSTshallnotbecalculatedratherVATshallbecalculatedonit.Hence,theGSTof18% shall be
charged on Food (Rs.500) and service charge of Rs.150

ImpactofGSTonrestaurant goers

Theoneandonlypointofinterest formostfoodloverswholovetodineoutwillbe–theGST rates on

restaurants. Let us try to understand how the taxes on a food bill look like in the GST regime,
compared to the previous regime.

Previousregime

Inthepreviousregime,diningatastandardACrestaurantwasconsideredtobeasupplyofboth goods and

services – which is why VAT as well as Service Tax was applicable. On top of the same, one
would find the various cesses, such as Krishi Kalyan Cess and Swachch Bharat Cess being
applied on the cost.

Inshort,thetaxesapplicable were:

 VAT,dependingonstate=12.5%to14.5%
 ServiceTax,considering60%abatement on15%standardrate=6.0%
 KrishiKalyanCess=0.2%
 SwachchBharatCess=0.2%
 TotalEffectiveTax=18.9%to 20.9%

Thus,thepreviousregimeofmultipletaxeshadacompositelevyofbothServiceTaxandVAT on food
and beverages served in hotels which made up to nearly 21% of tax to be shelled out from the
pocket of the end consumers.

GST regime

ThemajorimpactofGSTonhotelsandrestaurantsintheGSTregimeis,thatsupplyoffoodand beverages
will be treated as a supply of services. Under GST, Service Tax, VAT and all other indirect taxes
which were being charged earlier, will be subsumed.

69
AspertheGSTCouncil,thefollowingaretheGSTratesonrestaurants–

 Non–ACRestaurants–12%
 ACRestaurants–18%
 5StarHotels&Restaurants–28%
 SmallRestaurants&Eateries–5%(UnderCompositionScheme)paidbyhotelontheir
turnover, wherein there is a probability of this burden being passed on the consumer.

However, as discussed earlier, alcohol will be out of the purview of GST, and thus liquor will
attractVAT,asimposedbytherespectivestates.So,ifoneordersalcoholicbeveragesandfood, one pays
GST on food and VAT on alcoholic beverages.

Previousvs.GSTregime comparison

A quick GST calculation for restaurants will reveal a clearer picture. If we consider non-AC
restaurants,wecancomfortablycometotheconclusionthattherateshavereduced,asonlyVAT
intherangeof12.5%to14.5%waschargeable,whereastheGSTratesonrestaurantsinthenon- AC
category is 12%. Even if someone goes to an AC dine-in, and does not have alcohol, the GST
rates on restaurants are still more or less the same at 18%. However, a 5 star hotel is surely
bound to be a costlier affair.

70
 CHAPTER4:ANALYSISANDPRESENTATIONOFGSTIN
RESTAURANTS

BASICANALYSIS

GSTCALCULATIONINRESTAURANTANDBARSISEASY

PRESENTATIONOFGSTINRESTAURANTSBYCOMPARINGOF
RESTAURANTS

ANALYSISOFRESTAURANTINDUSTRY

RESTAURANTSARENOWBILLINGGSTTAXSEPERATELY.IS THIS
JUSTFIED?

HOWWILLHOTELSANDRESTAURANTSBEAFFECTEDBYGST?

TAXESONFOODANDDRINKSINRESTAURANTSTOGODOWN

DATACOLLECTIONFROMTHESTUDENTSRELATEDABOUT GST
AND GST IN RESTAURANTS THROUGH PIE DIAGRAM

BASICANALYSIS

71
  TheintroductionofGSThasnotaffectedcustomers,theyarehappypayingtax.

 The introduction of GSThas affected restaurants, because themanager has to pay the
salarytoeachandeverystaffmemberthroughtheprofitofrestaurants,becausebefore
introduction of GST their was service charges from that charges they use to pay the
salary of the staff members.

 Duetointroductionoffoodappslikeswiggy,zomato,etc.Theygivediscountstotheir
customers by paying taxes of their customers order.

 Therearelesschanceofblackmarketinginrestaurantssector

 Firstthetaxratethatcustomerhastopaywas30%butduetointroduction ofGSTthetax rate that

customers have to pay is 9% and maximum is 18%.

GSTCalculationinRestaurantsandBarsisEasy

The introduction of Goods and Services Tax aka GST has created some perplexity among
restaurateurs, not to mention diners. Although the slabs are clearly stated in the GST portal and
havebeenfloatedeverywhere,manyrestaurantsstillareconfusedandendupapplyingratesand
taxesaccordingtowhattheyinterpret, whereastherearefewoftheotherstakeundueadvantage of the
ignorance of people and charge the taxes according to their own wish.

As per Goods and Services Tax 2017, restaurants are divided into 3 categories for this purpose
and accordingly the highest rate of 28% is levied on luxurious or 5-star hotels or restaurants in
thesamecategory,whereasA/Candalcohol-servingrestaurantsorrestro-barsattract18%GST and
non-AC or non-alcohol serving hotels or restaurants are subject to 12% GST.

Allrestaurantscan'tchargeGST,theonlyrestaurantsthatareeligibleforthesamearethosethat are
registered. You aren't required to pay GST if the business isn't registered. Make sure you
checkwhethertherestaurantyou’revisitingisaregisteredoneornotyoucandosobychecking the GST
number which is usually given on the restaurant bill.

Also,inyourbill,GSTmayappeartwicesincethistotalamountofGSTisdividedintotwoparts out of
which one goes to the state funds i.e. SGST (State Goods and Services Tax) and the other part
goes to the Central Government’s exchequer i.e. CGST (Central Goods and Services Tax).
Diners must also check that if GST is applied multiple times in the bill under CGST or SGST
heads, collectively it must not exceed the above mentioned 12%, 18% or 28% threshold and
mustchargeequalportion.Forexample,ifyougotoanon-ACrestaurant,thetaxrateapplicable is 12%
so out of this total 12%, usually 6% is the SGST and 6% is the CGST.

AnotherpointwheredinersareconfusedastowhetherevenafterGST,dotheyhavetopayVAT as well.
The simple answer to this question is that in a restaurant GST is applicable on food and service
only and VAT is applicable on alcohol.

72
Let'ssay,you went to arestaurant andyourfood bill is₹1500 witha10%ServiceCharge of
₹150bringthistotalto₹1650.

Ontheotherhand,yourbillforalcoholicbeverages is ₹600,sointhisscenarioGSTwillbe applicable

on ₹1650 and VAT will be levied on ₹600 i.e. the alcohol bill only.

PRESENTATIONOFGSTINRESTAURANTSBYCOMPARINGOF
RESTAURANTS

1. TAJMAHALPALACEHOTEL

TheTajMahalPalaceHotel,isaheritage,five-star,luxuryhotelbuiltinthe SaracenicRevivalstyle in
theColabaregion ofMumbai,Maharashtra, India, situated next to the Gatewayof India.Historically
it was known as the "Taj Mahal Hotel" or the "Taj Palace Hotel or simply "the Taj". The taj
restaurant was formed on 16December 1903.

This restaurant is a five-star luxury restaurants. It deal with 28% of GST

tax.There are various tax rate for the hotel in taj hotel. But for restaurant the tax rate under GST
is28%. If you order ice-cream in taj restaurant they charge 18% +28% tax on overall bill
amount,because ice-cream good deal with 18% tax rate

2. AASHIRWADHOTEL

AASHIRWAD HOTEL is a hotel, two star hotel,built in the italic style in the Ghatkopar
regionofMumbai, Maharashtra, India. The restaurant was formed on 15 March 2001.

This restaurant is a two-star restaurant, It deal with 9% of GST rate. If you

orderice-creaminaashirwadhoteltheydon’tcharge18%separate GSTtaxonbillamount,
whenIaskthem why they don’t charge tax, their answer was “they want to give some benefits for
theircustomer, so that they can re-visit the restaurant.

ANALYSISOFRESTAURANTINDUSTRY
The Indian Restaurant industry today, is worth a staggering INR 247,680 crores and is
developing at a yearly rate of 11% – estimated to hit INR 408,040 crores by 2018. As per the
National Restaurant Association of India’s 2013 India Food Service Report, the segment
comprisesof1.5millioneatingoutlets,employing4.6millionpeople,whichagain,isprojected to rise
to 8 million by 2018. This growth has been fuelled by a combination of factors: the

73
growth of the great Indian middle class, rapid urbanization, growing awareness of western
lifestyles,morewomenjoiningtheworkforceandhigherdisposableincome,tonameafew.Not to forget
the organised food services industry – comprising the KFCs, Dominoes and Mc Donald’s of the
world, as well as the rising new age food booking and delivery start-ups like Swiggy, Foodpanda
etc. which are pushing the sector to greater heights.

PostGST,theGovernmentisseeingtheopportunitytogenerateanadditionalcollectionofINR 17,000
– 26,000 crores through closer monitoring of tax levy and collection from the
unorganizedsegment.Inshort,therestaurantindustryisclearlyahotsegment,andthiscallsfor a
detailed insight on the impact of GST on restaurants and the associated stakeholders – both
owners, as well as food-lovers across the nation who step out to dine once in a while.

RESTAURANTSARENOWBILLINGGSTTAXSEPERATELY.IS THIS
JUSTFIED?

Yes,itistotallyjustifiedontheirpart.IalsogetcrossedwhenIseeGSTbeingleviedonice- creams
separately in the bill but we cannot blame the hotels and restaurants for that.

Even before GST, you were paying VAT and/ or Service tax on the mouth-watering foods you
hadattheserestaurants.Youjustwerenotrealisingitasthepriceforeachitemonthemenuwas inclusive
of taxes.

Thisexplicitvisibilityofthetaxamountisabitannoying,Iagreebutifwearetoblameanyone for this, it

is the government. They reckon that we ought to know the amount of taxes we pay.

IssuewithhotelschargingGST:

Themainissue,whichisunacceptablehereistheincorrectpricingadoptedbyrestaurantson GST’s
implementation.

Putyourselfintheirshoes.Previously,youwerepayingtaxes@1–2%andnowyouseeinaGST discussion on
TV that restaurants shall charge GST @12% minimum.

Whatwouldyoudointhiscase?Youseethatthere’sanincreaseof 10%inthetaxrate?What would you

do?

Youasktheneighbournextdoor;yourfriendwhoworksasanaccountant;theyallsayonething and
finally you decide yourself that you increase menu rates by 10% flat. Period. Job well done.

Youcan’tholdhimresponsibleentirely here.

Btw, he doesn’t have the luxury of a tax expert by his side to advise him that there’s a scheme
calledcompositionscheme,bywhichhecanpayGST@5%andsimplifiedreturnsarerequired to be
filed only every quarter.

Thereisnoonetotell him,

74
”Listen boss! The Rs 50 you charged previously for that lovely dosa of yours was inclusive of
tax. Now, if you are gonna increase the rates, you have to increase it from their selling price
beforetaxes.Also,notallislost.Younowhave100%claim totheGSTamountyoupayonyour purchases
for set-off. So, consider this and then increase the price.”

Now, that you’ve come this far, go to that hotel where you feel you are being cheated and share
yourknowledge.Justtell himaboutthisandI’msurehewilldefinitely trytomakeamendsifhe was
wrong.

HOWWILLHOTELSANDRESTAURANTSBEAFFECTEDBYGST?

Restaurant owners have more reasons to cheer in the GST regime. Under the VAT regime,
restaurant business owners did not have any option to adjust the output service tax liability with
the credit of input VAT on goods consumed. However, under GST both these taxes will be
subsumed into GST and thus credit of input will be available for adjustment against the output
liability,irrespectiveofgoodsandservices.GSTwillbringreasonstorejoiceforbothconsumers and
restaurant owners under the new regime.

BasedontheprovisionsofModelLaw,itcanbesaidthathotelsectorshallbeimpactedboth positively
and negatively under the GST regime.

(i) The multiple taxes would be replaced by one single tax, the rate of which is likely to be
between16%-18%.Thehotelindustrywouldbenefitintheformoflowertaxratewhichshould help in
attracting more tourists in India.

(ii) There are likely to be concerns in valuation of restaurant services in view of the industry
practiceofdiscounts/offers/policiesintheformofincentives.Theproposedvaluationrulesare different
from the existing ones and as such this sector need to frame an appropriate policy for such
discounts in advance making it a part of documentation.

(iii) Serviceprovidershavingcentralizedregistrationwillhavetogetregisteredineachstate
whether providing hotel services on own account or through agent (franchise).

(iv) Serviceproviderswillhaveanoptiontotakedifferentregistrationorseparatebusiness
verticals which needs to be examined on case to case basis.

(v) Theprocedureforalltheinvoices/receiptstowardsinwardandoutwardsupplieswill
become cumbersome as each one of them will have to be uploaded in the system.

(vi) Thefrequencyandnumberofreturnstobefiledwillgoup.

(vii) ThereisaprovisionforGSTauditiftheturnoverismorethantheprescribedlimit.

(viii) The e-commerce companies may have to revamp the current models, as the VAT rate
arbitrageavailableinthecurrentlawmaynotbeavailableinGST.TaxCollectionatSource (TCS)
provisions have been introduced on ecommerce operators in the Model GST Law.

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However,therearenoprovisionsrelatingtocollectionoftaxatsourceunderthecurrenttax regime.

(ix) AlcoholandelectricityareoutofthepurviewofGSTnet.Thetaxationonalcoholwouldbe different

than the single GST rate. The hotel industry consumes a lot of electricity as a prime consumable
and the levy of electricity duty would also not be covered in GST. Thus, the hotel industry
would not be able to avail the input credit on the two items which will have a negative impact
on this sector.

(x) Thehotelindustryspendsalotofmoneyonconstructionandrenovation.Theyhavetomove with the

times in order to remain competitive and attract customers. The money paid as taxes on the
construction activities cannot be used as input credit to set off the taxes paid on the services
offeredbythehotelsandrestaurants.TheR&Dcesswhichisapplicableontechnicalknow-how fees and
franchise agreements in the industry is likely to become a part and parcel of GST.

TAXESONFOODANDDRINKSINRESTAURANTSTOGODOWN

TheimpactofGSTonfoodandliquorwillbelighteronthepocketasthetaxonfoodanddrinks in air-
conditioned restaurants will drop from 20.5 per cent to 18 per cent, whereas non-air- conditioned
restaurants will levy a 12 per cent tax on food and drinks.

WiththerolloutoftheGoodsandServicesTax(GST),therewillbeaconsiderableimpacton services
provided by hotels on food and alcohol.

TheimpactofGSTwillbelighteronthepocketasthetaxonfoodanddrinksinair-conditioned restaurants
will drop from 20.5 per cent to 18 per cent, whereas non-air-conditioned restaurants will levy a
12 per cent tax on food and drinks. Till now, customers had to pay a tax component that
consisted of a 14.5 per cent VAT and a 6 per cent service tax.

Therestaurantshavinglicence toserveliquor(withfullITC)willlevyataxof18percent,while
thosenothavingthefacilityofair-conditioningorcentralheatingatanytimeduringtheyearand not
having licence to serve liquor (with full ITC) will levy tax of 12 per cent. The 5-star hotels will
come under the highest slab of 28 per cent GST.

Liquorhada6percentservicetaxacrosssegments,whichhasnowbeenwithdrawn. Advertising

GST,whichwaslaunchedonthemidnightofFridayataspecialceremonyintheCentralHallof Parliament is the

mostsweeping tax reformsince Independence. Prime Minister Narendra Modi

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onFridaysaidtheGSTwillbe“notonlyataxreformbutaneconomicandsocial reformas
well”thatwillunifythenation,“checkcorruptionandendharassmentathandsofofficers”.

DATACOLLECTIONFROMTHESTUDENTSRELATEDABOUT GST
AND GST IN RESTAURANTS THROUGH PIE DIAGRAM

AREYOUAWAREABOUT GST?

14%

YES NO

87%

INTERPRETATION:

Accordingtothispiediagram,86%peopleareawareaboutGST,onother14%peoplearenotat all aware

about GST .

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 IFNO,THENREASONFORIT?

OTHER LACKOFKNOWLEDGE
NOT 3%
INTERESTED LACKOFAWARENESS
19% NOT INTERESTED
LACK OF OTHER
LACK OF
KNOWLEDGE
AWARENESS
58%
19%

INTERPRETATION:

ThereasonpeoplearenotawareaboutGSTarelackofknowledge,lackofawareness,someare not
interested and some have other reasons for it. 58% people have lack of knowledge about it,
20% are not aware about it, 19% are not interested in it.

ARE YOU AWARE ABOUTTHE RATESCHARGED

IN THE RESTAURANTS?
12%

YES
NO

89%

INTERPRETATION:

Accordingtothispiechart,only88%respondentsareawareabouttherateschargedinthe restaurants.
12% people are unaware about the rates charged in the restaurants.

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 ISGSTAFFECTINGPRESENTPOSITIONOFFOOD &
BEVERAGE INDUSTRY
8%

YE
S

92%

INTERPRETATION:

Accordingtothisquestion,92%peoplefeelthatGSTisaffectingthepresentpositionoffood& beverage
industry.

DOYOUFEELNEGATIVEIMPACTOFGSTIN RESTAURANTS?

YE
NO S
44%
YES
56%

INTERPRETATION:

Inthisquestion,56%peoplethatGSThasnonegativeimpactonrestaurants,whereas,44% people only

feel that GST has negative impact on restaurants.

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 DOESGSTAFFECTYOUASACUSTOMER?
NO
10%

YES
NO

YES
90%

INTERPRETATION:

90%customersrespondedthatGSTaffectsthemasacustomer,whereas,10%customersrespond as no,
they are not affected because of GST.

WHATISCONVENIENTACCORGINGTOYOU?
THEREIS NO
CHANGE
OBSERVED
BYME
15% BUYINGFROME-COMMERCE
WEBSITESPERSONALLY
BUYING GOING TO RESTAURANT
FROME- THEREISNOCHANGE OBSERVED
COMMERCE BY ME
WEBSITES
PERSONALLY 56%
GOINGTO
RESTAURANT
29%

INTERPRETATION:

According to this, 56% people feel convenient buying from e-commerce websites like swiggy,
zomato,etc,29%peoplefeelpersonallyvisitingarestaurantisconvenientand15%peoplehave not
observed any changes.

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 ARETHE RATESSETBYGSTCOUNCILWORTH?

YES
27%

YES
NO
MAYBE

MAYBE NO
64% 10%

INTERPRETATION:

Forthisquestion,27%peopleagreewiththeratessetbyGSTCouncil,ontheotherhand10% people do
not agree with it and 63% people are doubtful about about the rates set by GST Council.

TOCONCLUDE,WHATISTHEIMPACTOFGSTIN RESTAURANTS?

POSITIVE
21%

POSITIVE
NEGATIV
E
NEUTRAL
NEUTRAL NEGATIVE
60% 19%

INTERPRETATION:

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In this last question, 21% people feel that introduction of GST has brought in positive effect in
restaurantsontheotherhand19%peoplefeelit’sanegativeimpactand60%peoplearestillnot able to
clear their doubts whether it has positive impact or negative impact.

CHAPTER5: CONCLUSION
Working on this topic was interesting. I have got to know a lot about Impact Of GST In
Restaurants.Ihavelearntaboutratesapplicabletorestaurants,taxratesandapplicability.

FoodIndustryTheapplicationofGSTtofooditemswillhaveasignificantimpactonthosewho are living

under subsistence level. But at the same time, a complete exemption for food items would
drastically shrink the tax base. Food includes grains and cereals, meat, fish and poultry, milk and
dairyproducts,fruits andvegetables, candy andconfectionary, snacks, preparedmeals for home
consumption, restaurant meals and beverages. Even if the food is within the scope of GST, such
sales would largely remain exempt due to small business registration threshold. This project has
given me the knowledge about the GST in restaurant.

It can be concluded that GST has been going to be an historical record for its full fledge
implementationandhopefullythisbiggesthistoricalreformswillresultincaseofdoingbusiness in
India.

Thus, we can fairly conclude that GST will bring reasons to rejoice for both consumers and
Restaurantownersunderthenewregimeandwillhavemorereasonstoexplorethenewfood joints in
our neighbourhood and pamper our taste buds.
Itwasagoodexperienceworkingonthisproject.IhavelearntalotfromthisprojectaboutGST in
Restaurants and also ways to find out frauds and to identify the frauds.

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 INTERVIEWOFRESTAURANTOWNNER NAME

OF RESTAURANT: RADHA KRISHNA

NAMEOFOWNER:SHRIDHARSHETTY

HOTEL STAR: 2 STAR HOTEL

LOCATION: GHATKOPAR

RATINGOFHOTEL:4.5STAR

Q.1.ISTHERESTAURANTREGISTEREDWITHGST?

ANS:YES,WEAREREGISTEREDWITH GST.

Q.2WHATISTHEIMPACTOFGST ONYOUR RESTAURANT?

ANS:GSTANSWERSABOUTIT.ONECOUNTRYONETAX.ITCLEARSALLTHE
AMBIGUITY AROUND RESTAURANTS FROM THE BUSINESS AS WELL AS
CUSTOMERS PERSPECTIVE.

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 WHATELSEYOUWOULDLIKETOSAYABOUTGST?

ANS:RESTAURANTEURSWILLNOWBEABLEMAKEAMOREEFFICIENTCHOICE OF
SUPPLIERS. I WISH TO OPEN NEW BRANCHES WORLDWIDE , THIS IS NOW
POSSIBLE BECAUSE OF GST WHICH HAS BROUGHT IN ONE COUNTRY ONE TAX.
ANDIAMSURETHISWILLHAVEARIPPLEEFFECTONHOWBUSINESSESWORK IN
INDIA.

WHATWOULDYOUSAYISGSTHAVINGAPOSITIVEEFFECTORNEGATIVE EFFECT?

ANS:ACCORDINGTOMEGSTHASBROUGHTINPOSITIVEEFFECTS.GSTALLOWS
EVERYONE TO PAY A SHARE OF TAXES AND THEREFORE WILL EXPAND TAX
BASE IN INDIA.

HOWDOYOUCHARGEYOURCUSTOMERSONTHEFOODTHEYEATORSAME FOR ALL?

ANS:NO.WEDON`TCHARGEONTHEFOODTHEYEAT.IT’STHESAMERATEFOR ALL.

WHYYOUDON’TCHARGEGSTONCUSTOMERS BILLS?

ANS.WEDON’TCHARGEGSTONTHECUSTOMERSBECAUSEWEWANTTOGIVE
BENEFITS TO OUR CUSTOMERS,SO THEY CAN COME TO OUR RESTAURANT
AGAIN AND AGAIN ,BUT WE PAY GST TAXES TO GOVERNMENT BECAUSE IT IS
OUR RIGHT TO PAY TAX.

CANYOUREVEALTHEPROFITOFYOURRESTAURANTAFTER
INTRODUCTION OF GST?

ANS.NOWECANTREVEALTHEPROFITOFOUR RESTAURANT.

SOCANYOUSAYISPROFITINCREASINGORDECREASINGAFTER
INTRODUCTION OF GST?

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ANS.THEPROFITISNOTRAPIDINCREASING,BUTTHEPROFITISQUITEHIGHAS COMPARE TO
BEFORE,BUT IT IS INCREASING AND DECREASING QUITE STAGE.

DOYOUAGREE/DISAGREEABOUTGSTCHARGEINRESTAURANT

ANS.YESIAGREEABOUTGSTCHARGEINRESTAURANT,BECAUSESEETHEGST IS
CHARGE FOR THE WELFARE OF THE COUNTRY.SO BEING PART OF THE
COUNTRY, THE PERSON RIGHT IS TO PAY TAX. AND BY PAYING TAX THEY ARE
WELFARING THEMSELVES.

WHATAREYOUROPINIONABOUTGST?

ANS.SOITISAGOODINITATIVESBYTHEGOVERNMENTOFINDIABY IMPOSSING THE

GST TAX IN INDIA.

WHATDOYOUTHINKINTRODUTIONOFGSTHASIMPACTONBLACK MARKET
LIKE CHARGING ANY RATE ON GOODS RELATED TO FOOD?

ANS.YES,FIRSTTHEWHOLESELLERWEUSEDTODEALHEWASNOTGIVINGUS
PROPER TYPE OF BILL BUT NOW DUE TO INTRODUCTION OF GST,HE IS ALSO
NOW REGISTER UNDER GST SO NOW HE GIVE US PROPER BILL.

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 BIBLIOGRAPHY/REFERENCE
Informationiscollectedfromvarioussourcessuchas:
BOOKS:
TEXT BOOKS
REFERENCEBOOKS

NEWSPAPAR:
THEECONOMICTIMES

WEBSITES:
TAX GURU
CLEARTAX

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