How much should you be charged on food Bills/All your concerns about food bills after GST

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Someone mentioned on twitter how she is planning to cut off her outdoor eating habits as she feels the surge in bills post GST. When we asked her how much was she charged post-GST, She had no clue about the rates. Well, that’s bad we thought. Being aware of basic rates is very important. It is always better to know basic tax rates because you never know you could end up getting cheated. It’s basic stuff, everybody must know what the taxes they are liable for. Spare a minute and read this,

Establishment of Restaurant GST rate
AC 18%
Non AC-Not serving alcohol 12%
Non AC-Serving alcohol 18%
5 star Restaurant 28%

Important points:

For an AC restaurant-18% rate is applicable whether or not it is serving alcohol

The rates are same for takeaways and dine in

If restaurant has AC in any portion of the restaurant, you will have to pay the standard rate 18%. You will not be charged at a different rate of non AC if you are sitting at a non AC portion or ordering for takeaway from non AC portion.

Since liquor is not covered under GST and it is state Governments control. So if you have ordered for food and alcohol both. GST will have to be charged only on your food bill. VAT will be charged on alcohol as per State Government prescribed rates.

What about Service charge? Should GST be imposed on the amount before Service charge or after service charge?

Service charge imposed by any Restaurant is not a tax. Don’t confuse service charge with service tax. As per the Ministry of Consumer Affairs, Food and Public Distribution, service charge levied by the restaurants, is the voluntary amount paid by the customers, at their discretion.

Government has issued guidelines that Service charge is not mandatory but hospitality industry reacted by saying that guidelines is not law and they would continue to levy service charge unless Government comes up with law to prohibit the same.

Therefore what restaurants do is they put a visible notice at the outlet/also highlighted in menu sometimes that service tax would be levied by them. There is no clarity yet on if a consumer can deny or not because as of now if restaurant is informing you in advance, you would have to pay it as a general practice. So next time you see SERVICE CHARGE on your bill, don’t think of tipping the staff! As your Service charge is basically like the tip which would be used by a restaurant for staff welfare.

And yes, sadly, GST will be levied on entire sum of food bill, including service charge.

Thanks for reading! You could always get in touch with professional through caonweb.com for any questions you have.

About caonwebteam

The CAONWEB Team comprises qualified chartered accountants and experienced investment experts who are passionate enough about finances to bring you the best advice and tips on everything related to your hard-earned money.
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