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The Impact of GST on your Restaurant Bill

The Goods and Services Tax (GST) is set to make a difference to the taxes on your restaurant bills. The next time you eat in a restaurant, your bill will be different-it already is actually. This is how.

As per the system of taxation before GST, the restaurant sector is burdened with multiple high-costing taxes and charges. On each and every food and beverages bill, the diner pays additional VAT as well as service tax and service charge.

With the execution of GST, which came into force from 1 July, all taxes will fall under a single bracket, adding uniformity by removing the procedure of paying multiple taxes.

Under the new tax regime, products have been put into five categories: those that are exempted from tax, 5 %, 12 %, 18 % and 28 %.

The GST council has agreed on different tax slabs for restaurants depending on their turnover and whether they are air-conditioned or non-air- conditioned. This means customers will have to shell out more or less depending on whether they are visiting a restaurant with air conditioner or a regular non-ac food joint.

Pre-GST, you were paying three extra charges: service charge, service tax and value-added tax (VAT). Now, the complex nature of GST has created an opportunity for restaurant owners to mislead their customers by making them pay extra. So, at least in the initial few months, customers will have to be more cautious and aware about the rates of the services they are availing of at restaurants - there may be instances where they end up paying more due to lack of information.

Here are some points to keep in mind while paying for your food bill

  1. Earlier, consumers were paying two taxes: service tax and value-added tax (VAT). Under the new regime, both of these have been replaced by GST. Next, restaurants are broadly divided into two types: air-conditioned restaurants and non-air-conditioned restaurants. If you are eating in a non- AC restaurant, you have to pay 12 % as GST. It is made up of central GST (6 %) and state GST (6 %). The same rates also apply to local delivery restaurants. However, if you are in an AC restaurant, you will have to pay 18 per cent GST irrespective of the fact that it serves alcohol or not.
  2. If the snacks sold from restaurants are pre- packed and pre-cooked, consumers will have to pay 12 % GST. However, the interesting fact is that no GST is levied on liquor or liquor products though liquor will attract VAT, as imposed by different states. So, if you order alcoholic beverages and food, you should be billed for GST on food and VAT on alcoholic beverages.
  3. The first thing to take care about is the service charge. Consumers should now understand that service charge is not a tax. The government has not ordered any restaurant to levy service charge - they do it on their own. Usually, this amount is 10 % of the price of food products that you order, but if you don't want to pay, you don't have to. It is completely the customer's call, whether they want to pay the service charge or not. In case the restaurant forces you to pay for it, you can sue the establishment in a consumer court or complain to the state GST department.

As India has joined the global league of 'one nation, one tax', the next time you dine at a restaurant, do check your bill to see if the proper GST rate has been levied. The government has also launched an app, called GST Rate Finder, to help people find out the GST rate on the particular goods/services. The rates can also be accessed on the tax department's website.

Divya Patwal

VOICE