Eating out at cafes or restaurants post the implementation of the Goods and Services Tax (GST) has suddenly become a debatable topic among consumers. We have been running around paying more without knowing its actual applicability.
How much GST will eating at a small, roadside dhaba cost? Will GST increase my bill when I eat at a restaurant and order drinks? Am I being overcharged on my total bill? There seems to be a looming question mark over the tax rates printed on restaurant bills.
Restaurant bills prior to GST had three basic levies over and above the total amount charged for consumption. These are:
Service tax: This was the tax charged on the services of the restaurant.
Service charge: This is charged by restaurants and a customer is not legally bound to pay as per government rules.
VAT: This is the tax on the food consumed.
The Center brought out a GST breakup a few days back, explaining just exactly how your eating out bill gets impacted. Here’s the lowdown:
* Non-AC eateries (not serving liquor) will charge tax at 12% — CGST (6%) + SGST (6%), local delivery restaurants also fall under this.
* AC restaurants (those serving liquor and those that don’t) will charge tax at 18%
* Non-AC eateries serving liquor will charge 18%
Note: The table above indicates GST rates applicable to supplies made by restaurants in different circumstances. However actual GST incidence will be lesser due to increased availability of input tax credit.
This limit is Rs 50 lakh for Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim and Himachal Pradesh.
Keep in mind: No restaurant can charge GST at 28%. In fact, the tax department has asked restaurants, hotel and eateries to cut rates on food items to reflect the benefit of being able to set off tax paid on inputs under GST.
Also, there is no GST on liquor or liquor products. GST is levied on food bill in a restaurant. Liquor will attract VAT, and not GST. So, if you order liquor along with food in a restaurant, you will be charged GST on your food and VAT on the drink you have.
One must also remember that GST will be levied on entire sum of food bill, including service charge.
So, with these points in mind, do check your bill carefully and ask the manager in case you need clarification. But don’t be a victim by paying more than required in the name of GST.