GST Impact On Restaurants in India

IMPACT OF GST ON
RESTURANTS
INTRODUCTION
 The Goods and Services tax is said to be one of the

biggest tax reforms since independence. It is an
indirect tax that applies to the entirety of India,
replacing several cascading taxes imposed by India’s
central and state governments.
 Introduced as the Constitution One Hundred and First

Amendment Act of 2017, GST provides a simpler way
for taxing goods and services.
 On July 1st 2017, when the GST was first introduced in

the country, the rates prescribed for hotels were 12%
on non a/c restaurants and 18% on a/c restaurants.
BEFORE GST
 The restaurant bill used to contain

 service tax (Krishi kalyan )cess 0.5%
 Swachh Bharat cess 0.5%
 Value Added Tax 14.5%
 Service tax 5.6%
 service charge is charged by the restraints for
the service they do which adds up to 10%.
AFTER GST
GST ON NON AC RESTAURANTS:
GST ON AC RESTAURANTS:
PRE-GST
Rate is decided by
restaurants.
Applies to the cost of

items, not to service
charge
TAX RATES AND ITS TYPES
 Type 1- Non AC restaurant without liquor
1. Regular Scheme- Tax applicable- 12% charged
additionally to the bill
2. Composition Scheme- Tax applicable- 5% borne by the
owner
 Type 2- AC restaurants with Liquor- Tax applicable- 18%
charged additionally in the bill.
 Type 3- Out door catering services- Tax applicable- 18%
of the value of services provided with full input tax credit
 Type 4- Five-star hotels
 Tax applicable- 18% of the value of services provided
with full input tax credit
PRE GST BILLS: SUBWAY
GST at 18%- AC Restaurant GST at 12% - Non AC Restaurant
BILLS OF STARBUCKS
 Bills of Starbucks under 18% and 5%
GST Slab Rates
DURING GST IMPLICATIONS
 “Restaurants, however, did not pass on the input tax credit

(ITC) to customers and so the ITC facility is being withdrawn
and a uniform 5 per cent tax is levied on all restaurants
without the distinction of AC or non-AC,” Finance Minister
Arun Jaitley said after the GST Council meeting.
 The new tax rates – 5% will be effective November 15, 2017.
 Removal of ITC.
IN JUNE 2019 ABOUT GST
 National Restaurant Association of India(comprises more than 5 lakhs
restaurants) which represents giants like McDonald’s and Domino’s
demanded Government of India to implement Dual GST Structure.
 Dual GST Structure: 12% for the restaurants that are ready to pay the
higher rate but can claim the ITC and 5% for others.
 The government is losing annual GST revenue of Rs 2,937 crore due to
denial of input tax credit,” the letter added.
 The letter to the finance ministry estimates the food service sector at Rs 4
lakh crore in FY 2018-19, with an overall GST contribution of Rs 14,865
crore from the organised sector.(Around 13776 from un organised sector).
CONSOLIDATION COMPARISON
MP Taking Note for GST Implication
Further improvements
due to GST
EXPLANATION
CONCLUSION
PRE-GST POST-GST
 VAT, Luxury tax and  One tax exclusive of service
Service tax charge
 Cascading effect  No tax on tax effect- all
 No ITC taxes subsumed under one,
paid by the final consumer
 Lower tax rates
 Abatement of tax- ITC in
 Taxes imposed by some cases
both Central and State
Governments
 Higher tax rates in some
cases
 Uniform tax rate all over the
country
REFERENCES
 https://economictimes.indiatimes.com/industry/cons-products/food/prices-go-up-
on-menus-at-qsrs-despite-cut-in-gst/articleshow/61938691.cms
 https://blog.ezeetechnosys.com/impact-analysis-of-gst-indian-hospitality-industr
y/?utm_campaign=QuoraAns&utm_medium=Quora&utm_source=Quora
 https://cleartax.in/s/impact-gst-food-services-restaurant-business
 https://www.posist.com/restaurant-times/trending/all-your-questions-about-the-g
st-and-the-restaurant-business-answered.html
 https://www.gstindia.com/the-challenges-of-implementing-gst/
 https://twitter.com/mcdonaldsindia/status/
 https://www.timesnownews.com/business-economy/economy/article/consumers-
may-not-be-able-to-enjoy-full-gains-of-5-gst-at-food-joints-here-is-why/127507
THANK YOU….

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IMPACT OF GST ON

 The Goods and Services tax is said to be one of the

 Introduced as the Constitution One Hundred and First

 On July 1st 2017, when the GST was first introduced in

 The restaurant bill used to contain

Applies to the cost of

 “Restaurants, however, did not pass on the input tax credit

 The new tax rates – 5% will be effective November 15, 2017.

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