GST Rate: Restaurant Service, Canteen, Composition Scheme

GST Rates 

After the issue of notification no.48/2017-Integrated Tax (Rate), restaurant need not be classified as Air Conditioner or non-Air Conditioner for GST purpose.

*etc includes- hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes

**Above GST rates for a restaurant also applies to Canteen and Mess.

Component of Restaurant Bill

1. Service Charge/Tips

Service charge is voluntary payment by an eater and therefore, restaurants are not legally bound to enforce it. As per the guidelines, the column of service charge in a bill should be left blank for customers to fill up before making the final payment.

GST needs to be paid on service charges at the rate applicable to its restaurant service.

If a restaurant insists on customers paying the service charge, an eater can file a complaint in consumer court.

2.  VAT (Value added Tax)

This is the tax charged on the non-GST products like alcohol of your bill. VAT is regulated by each state.

3. GST (Goods and Services Tax)

GST is levied on all taxable supplies i.e both goods and services. A restaurant should always charge CGST+SGST/UGST as GST for both indoor and take away foods.

However, in case of outdoor catering, if the place of supply is outside the state, IGST needs to be charged.

4. Home Delivery Charge

GST is payable on the delivery charges.

When a restaurant makes a home delivery, GST rate is same for both food and delivery charge. For example, on a Gross bill of Rs. 600 (Rs.500 for food and Rs.100 as delivery charges), GST @ 5% will be Rs.30 only.

However, when a third party like Swiggy makes a home delivery, apart from the restaurant’s bill value, separate GST of 18% is levied on delivery charges.

I have used both Swiggy’s and Zomato’s service recently.

I encountered a violation of  GST norms in both of them.

Swiggy is not paying GST on packing charges whereas the zomato avoids giving proper GST bill to their customers.

A complete theft of GST is being carried out by these e-commerce operators. [What’s your take on this. Let me know in the comment]

Example: Mr.Ghosh, dine at a restaurant, Food of Rs.400, Alcohol of Rs.200 and Service Charge of Rs.100. Calculate his total bill. VAT @ 50%, GST @ 5%. 

Composition Scheme

A restaurant owner can take composite scheme registration if his aggregate turnover in preceding financial year doesn’t exceed 1 Crore (75 Lakh for Few(a) Arunachal Pradesh, (b) Assam, (c) Manipur, (d) Meghalaya, (e) Mizoram, (f) Nagaland, (g) Sikkim, (h) Tripura, (i) Himachal Pradesh  States)

After the Notification no.46/2017 Central Tax (rate) composition scheme has become irrelevant for restaurants who are liable for GST @ 5% (without ITC). However, Restaurants who are liable for 18% GST (with ITC) can still take composite scheme registration.

However, a restaurant serving alcoholic liquor is not eligible for composite scheme registration. 

Relevant FAQ

Q 1: I operate a canteen (mess) in Delhi Public School. Should I charge GST?

Ans: No, Catering in pre-school or higher secondary school form part of ancillary services and this service is exempted from GST.

If such canteens are in any College than GST will be chargeable @ 5%