Is GST Payment Compulsory for All Restaurants?

Learn When It's Required and When It's Not.

Dining out is a popular pastime in India, but understanding the bill can sometimes be confusing, especially when it comes to the Goods and Services Tax (GST). While most restaurants levy GST, there are certain scenarios where you might not be required to pay it. In this blog, we'll unravel the mystery of GST in restaurants, explaining when it's mandatory and when you can enjoy tax-free meals.

Understanding GST in Restaurants:

Standard Rate: As of February 2024, most restaurants fall under the 5% GST rate. This means a 5% tax is added to your food bill. However, some high-end restaurants with room tariffs exceeding ₹7500 per unit come under the 18% GST bracket.

Scenarios Where You Pay GST:

Regular Restaurants: For dine-in or takeaway at any restaurant with a 5% or 18% GST rate, you'll be charged GST on your entire bill, including food, drinks, and service charges (if applicable).

Online Food Delivery: When ordering through food delivery apps like Zomato or Swiggy, GST applies similarly to the restaurant's GST rate. However, additional delivery charges might be levied separately and may or may not attract GST depending on the platform's policy.

Alcohol Consumption: GST applies to alcoholic beverages served at restaurants, typically at the applicable state's liquor tax rate in addition to the standard GST rate.

Scenarios Where You Might Not Pay GST 

Composition Levy Scheme: Some small restaurants opt for the Composition Levy Scheme, which allows them to pay a fixed tax based on their annual turnover instead of individual GST on each bill. These restaurants cannot charge GST from customers. Look for the "composition taxpayer" label on the bill or check the GST portal to confirm their status.

2.    Snacks and Take Away from Small Cafes: Small cafes selling loose eatables like samosas, pakoras, or beverages without designated seating areas fall under the exempted category and don't charge GST.

3.    Meals at Educational Institutions: Food served within educational institutions like universities or hostels for students and staff is often exempt from GST.

How to Verify and Avoid Overpayment:

Always ask for a bill: Request a proper bill with a breakdown of food items, taxes, and service charges.

2.    Check the GST number: Ensure the restaurant's GST number is mentioned on the bill and matches their online verification on the GST portal.

3.    Question discrepancies: If the bill seems incorrect or includes GST when it shouldn't, politely query the restaurant staff and request clarification.

Additional Tips:

·         Keep in mind that service charges are optional and separate from GST. You have the right to request their removal if you're dissatisfied with the service.

·         If you suspect tax evasion or overcharging, you can file a complaint with the GST authorities online or through designated helplines.

Conclusion:

Understanding GST regulations in restaurants empowers you to be a discerning consumer and avoid unfair taxes. By remembering the key scenarios where GST applies and doesn't, you can enjoy your meals with greater clarity and potentially save money. Do your research, ask questions, and be aware of your rights as a customer!

Disclaimer: This blog is for informational purposes only and should not be considered professional tax advice. Please consult a qualified tax professional for specific guidance regarding your individual circumstances.