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New GST rates for Restaurants are lower, but Bill might remain the same! | India

NEW GST RATES FOR RESTAURANTS

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If you love eating out, then GST hasn't really been very favorable for you.

As it is, its rollout in India has been marred by controversies, glitches & technical issues.

On top of that, higher tax rates have led to a decent increase in the final bill that has forced many food lovers to control their love of eating at the restaurants.

However, with the recent decision to lower the GST rates to 5%, applicable to both AC & non AC restaurants starting from November 15th, 2017, many people heaved a sigh of relief.

They believed that their restaurant bills would definitely decrease considerably.

BUT THAT MAY NOT ACTUALLY BE THE CASE!


WHAT ARE ALL THE CHANGES?

When GST was rolled out in India, it was being levied at 12% at non AC restaurants and at 18% at AC restaurants. Alcohol, however, was out of this tax rate and it attracted VAT and other taxes as before.

But recently, the government gave relief to restaurants by lowering the rate to 5% for both types of restaurants. Alcohol will remain under the same tax rates as before.

However, a GST rate of 18% will be applicable to restaurants that are part of a star hotel which offers rooms at a per night rate of Rs 7500/- or more.

Also, the Government has asked restaurants to show food rates in their menu, inclusive of taxes. Till now rates shown on the menu were exclusive of taxes and tax was calculated on them individually at the time of the creation of the bill.

All these are definitely positive changes and might make you believe that your restaurant bills from today might reduce considerably...right?



NO, THE CHANGE MAY NOT BE MUCH!

Why? you ask!

The recent changes have brought about a change in the INPUT TAX CREDIT or ITC that was being provided to these restaurants.

What is INPUT TAX CREDIT?
Input tax credit mainly means that when a manufacturer pays the tax on his output, he can deduct the tax he previously paid on the input. YOU CAN READ MORE ABOUT IT HERE.

Over the last few months, the government felt that these restaurants were not passing on the benefits to the customers. Hence they decided to remove this facility and lower the rates to a uniform 5%.

For a few months, various restaurants have been mulling over an increase in menu prices. Now with the removal of ITC and inclusion of taxes in menu prices, it is quite certain to happen soon.

So the decrease in the tax you pay may be negated to some extent by an increase in food prices. And the final bill may not decrease as much as you would have hoped for.



I ORDER FOOD ONLINE, HOW IT AFFECTS ME?

More or less in the same way those who are dining out, since food is delivered from the same restaurants.

The final bill will be taxed at new rates, but you may find the rates of your favorite food items increased.

If you have dined out after the rollout of new rates, do share your experience in the comments below. We would love to know your thoughts.

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VIKALP GAUTAM
I am an ardent Techie and a Free Thinker. I love to explore new topics and technologies, and share my knowledge and views with the world.
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Comments

  1. Hi, Thanks for providing informative knowledge. Keep it up. You keep giving such information.
    Regard
    Dr. Anand Bhardwaj

    http://blog.vastu-india.com/vastu/best-vastu-consultant-in-gurgaon-vastu-expert-in-gurugram/

    ReplyDelete

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