GST Rates on Food and Restaurants Services
Goods and Services Tax (GST) is the indirect tax that has replaced various other indirect taxes imposed on several food items and restaurant services in India. The Parliament of India passed the Goods and Service Tax Act on 29 March 2017, which was brought into effect on 1 July 2017.
GST replaced VAT, but both have the same taxation slabs and eliminates the confusion of understanding the bifurcation of charges that are mentioned in the restaurant bills. Here are more details about the GST rates and its impact on the price of good items and services.
Previous GST Rules
Goods and Services Tax was introduced in July 2017 when the GST imposed on restaurants was categorised into three different slabs. The following are the three main GST slabs depending on the type of restaurant:
- Restaurants without AC (air conditioning): 12%
- Restaurants with AC or liquor licenses: 18%
- Restaurants within five-star hotels: 28%
Earlier, restaurants considered the tax input credit that was advantageous for all Indian restaurants. Restaurant owners purchasing essential restaurant supplies can deduct the GST paid on these items from their tax bill amount.
GST Rates
The Goods and Services Tax is imposed on restaurant services and food items as per the applicable rates as decided by the GST Council of the Government of India. The GST rates impact the prices of consumable food items and the tariffs of various services provided by the restaurant. Here is the list of GST rates on various food services and items:
- Food Services:
After implementation of GST on food services, restaurants come under the 5.00% GST rates and option of claiming 18% GST with Input Tax Credit (ITC) or just the ITC. The following is the complete list of applicable GST rates on restaurant services including beverages, food, and accommodation:
Services | GST Rates |
Standalone restaurants with takeaway facility including both AC and non-AC restaurants | 5.00% without ITC |
Food delivery service or standalone catering service | |
Indian Railways or IRCTC catering service or licensees of IRCTC serving food at platforms or in trains | |
Composite outdoor catering within hotel with room tariff less than Rs.7,500 | |
Restaurants within hotels with room tariff less than Rs.7,500 | |
Cafeteria, mess, or canteen operating on a contractual basis not for any event or occasion in school, college, office, or industrial unit, serving food or drinks | |
Composite catering service in hotels with room tariff Rs.7,500 or more | 18% with ITC |
Restaurants in hotels with room tariff Rs.7,500 or more | |
Premises organising function or renting for events and providing food services | 18% |
Food services provided in occasions, conferences, events, exhibitions, and indoor or outdoor function | |
Other services such beverages, food and accommodations |
- Food Items:
Here is the list of GST rates on various packaged, un-packed, and other food items:
Food Items | GST |
Fresh or chilled non-veg items (not packed in container) such as meat | Nil |
Fresh or chilled vegetables such as onion, garlic, potato, leek, etc. | |
Fresh or dried fruits such as coconut, banana, apples, grapes, pears, etc. | |
Packed vegetables (packed in container) in the form of steamed, boiled, or cooked | |
Cooked, preserved, or fresh eggs in shell | |
Cream and unsweetened milk (unpasteurized or pasteurized) | |
Vegetables preserved using material not suitable for immediate human consumption such as brine | |
Container packed dried leguminous vegetables with registered trademark | 5.00% |
Vegetables such as thyme, curry leaves, bay leaves, turmeric and ginger except the fresh turmeric and ginger | |
Powder of dried leguminous vegetables | |
Eggs not in shell, cooked by steaming or yolk boiled | |
Container packed meat with registered trademark | |
Pre-labelled and pre-packaged curd, lassi, and buttermilk | |
Pre-packaged and pre-labelled rice, wheat or meslin | |
Pre-packaged and pre-labelled cereal flour | |
Vegetables such as edible parts of the plant, nuts, fruits, and vegetables preserved using acetic acid or vinegar | 12% |
Edible part of the plant, fruits, vegetables, nuts preserved using sugar | |
Chocolate and food prepared using cocoa | 18% |
Food prepared using malt extract, flour, or cocoa of quantity less than 40% of the total weight |
Pre-GST Restaurant Bill
Understanding a restaurant bill may seem complex as there are various charges involved. Before the Goods and Services Tax was introduced, fine-dine restaurant bills displayed service tax, Value Added Tax (VAT), service charges, and other costs added over the food's value.
Here is the list of charges involved in a pre-GST restaurant bill:
- Service Tax: This is the tax imposed on the services provided by the restaurant. This is imposed by the government and not the restaurant, which is bifurcated from the food portion from the services portion to avoid complications in calculating the tax incurred on each section of the bill.
- Service Charge: This is a certain amount charged by the restaurant, not by the government.
- Value Added Tax: This is the tax imposed on the food portion of the bill, and the amount is pre-decided by the government.
Post-GST Law
The tax obligations changed after the implementation of GST on restaurant bills. All the separate taxes and charges are combined into one by the GST, and the input VAT is adjusted and credited. Restaurants entrepreneurs and food service firms must plan out their tax obligation under GST assessment.
Impact of GST on Food and Restaurant Business
The following are the impacts of GST on the food and restaurant business:
- Combines multiples taxes and cess such as Krishi Kalyan cess, VAT, and Service tax into GST
- Decreases effective tax amount imposed on restaurant bills
- Service charges remain the same even after the implementation of the GST
- GST can be claimed that is paid on rent and raw materials
- Implementation of GST removes Input Tax Credit
- ITC benefits are available to only those restaurants charging 18% GST under the GST rules
- No food items are charged more than 18% GST
FAQs on GST Rates of Food Items and Restaurants
- Is GST charged on takeaway food?
Yes, takeaway food also comes under GST taxation and the GST rate charged ranges between 5.00% to 18% depending upon the location of the restaurant.
- What is the GST on chocolate and cocoa products?
Chocolate and cocoa products are charged under GST for the food segment or food industry at a rate of 18%, as these items are not considered as essential commodities.
- What is the highest GST rate on food items?
The highest GST rate under GST taxation rules is 28% and no food item is taxed under this highest GST rate. As no food item is taxed under 28% GST, currently, 18% GST is considered as the highest applicable GST rate.
- Is GST mandatory for food business?
Yes, in some states GST is mandatory for food and restaurant business with revenue above Rs.20 lakh. If the yearly aggregate revenue exceeds Rs.10 lakh, then the restaurant or the business owner must register themselves for GST.
- Does cooked food have GST?
Cooked food or if the food is still hot while selling it is free from GST. While any hot or cold food is sold as a single item and is purchased for consumption away from the premises, then GST is imposed on it.
- Can food items free of GST charge be subsequently taxed?
Yes, any food item which was not under GST may be taxed under the GST tax regime if it is sold in a place of entertainment, sports, or leisure, such as restaurant, snack bar, a stand, or café.
- Is there any GST-free food item?
Yes, there are certain food items that do not charge any GST on the consumers. Such food items are meat, fish, fresh vegetables and fruits.
- Which restaurants can charge 18% GST?
Restaurant with liquor license or with AC facility charges 18% GST. While some restaurants that are within five-star hotels charge 28% GST.
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