FOOD & RESTAURANT INDUSTRY GET MAJOR GST RATE CUT

There was lot of murmuring going on in general public about the heavy levy of GST on eating out. There is lot of buzz that such levy has not only make a big hole in the pocket of common man as eating out is nowadays very common because of various reasons. Such heavy rate has also motivated some scrupulous element to evade tax, some of the postings at social media has suggested that the amount has been charged on account but has never been deposited with Government.

In the wake of all this the Government has taken bold steps and has completely changed the GST levy on food and restaurant services. As per the Central Government notification No. 46/2017-Central Tax (Rate) dated November 14, 2017 has made some sweeping changes in GST rates of restaurant and other services:

S. No.	Description of Services	Rate	Remark
Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration:
(i)	provided by a standalone restaurant, eating joint including mess, canteen: (a) neither having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year (b)  nor having license or permit or by whatever name called to serve alcoholic liquor for human consumption.	5% GST (i.e. 2.5% CGST and SGST/UTGST each)	without Input Tax Credit ('ITC')
(ii)	provided by a standalone restaurant, eating joint including mess, canteen, having license or permit or by whatever name called to serve alcoholic liquor for human consumption	5% GST (i.e. 2.5% CGST and SGST/UTGST each)	without Input Tax Credit ('ITC')
(iii)	provided by a standalone restaurant, eating joint including mess, canteen, having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year.	5% GST (i.e. 2.5% CGST and SGST/UTGST each)	without Input Tax Credit ('ITC')
Comments: So, with the said notification, in case of standalone restaurant, eating joint including mess, canteen irrespective of the fact whether they are having the facility of air-conditioning or central air-heating and/or having license or permit or by whatever name called to serve alcoholic liquor for human consumption the GST rate would be 5% (i.e. 2.5% CGST and SGST/UTGST each) however the credit in respect of input goods and services would not be available. The fate of takeaway food from these type of food joints would also be same.
Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied or provided by:
(i)	a restaurant, eating joint including mess, canteen, those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of less than seven thousand five hundred rupees per unit per day or equivalent.	5% GST (i.e. 2.5% CGST and SGST/UTGST each)	without Input Tax Credit ('ITC')
(ii)	a restaurant, eating joint including mess, canteen, those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of more than seven thousand five hundred rupees per unit per day or equivalent.	18% GST (i.e. 9% CGST and SGST/UTGST each)	Input Tax Credit ('ITC') Available
Comments: So, with the said notification, one more classification has been added in respect of restaurant, eating joint including mess, canteen that are forming part of any of hotels, inns, guest houses, clubs, campsites or other commercial places. Here, two separate GST rates are prescribed for such type of food joints based on the per day tariffs charged by the business premise where these are located.
Supply, by way of or as part of any service or in any other manner whatsoever:
(i)	in outdoor catering wherein goods, being food or any other article for human consumption or any drink (whether or not alcoholic liquor for human consumption), as a part of such outdoor catering and such supply or service is for cash, deferred payment or other valuable consideration.	18% GST (i.e. 9% CGST and SGST/UTGST each)	Input Tax Credit ('ITC') Available
(ii)	in a premise (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises.	18% GST (i.e. 9% CGST and SGST/UTGST each)	Input Tax Credit ('ITC') Available
Food and beverage services not covered above		28% GST (i.e. 14% CGST and SGST/UTGST each)	ITC available
Comments: However, the said notification has not made any changes in the rate in respect of outdoor catering services and services provided by convention center, club, pandal, shamiana pandal or any other place, specially arranged for organizing a function, together with renting of such premises.

However, no changes have been made by recent notification in respect to accommodation service provided by hotels, Inn, Guest House etc. accordingly the rate prescribed by  Central Government vide notification No. 11/2017-Central Tax (Rate) dated June 28, 2017 in respect of accommodation services can be summarized here under :

S. No.	Description of Services	Rate	Remark
Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes
	having declared tariff of a unit of accommodation of less than one thousand rupees per unit per day or equivalent.	Exempt
	having declared tariff of a unit of accommodation of one thousand rupees and above but less than two thousand five hundred rupees per unit per day or equivalent.	12% GST (i.e. 6% CGST and SGST/UTGST each)	ITC available
	having declared tariff of a unit of accommodation of two thousand five hundred rupees and above but less than seven thousand five hundred rupees per unit per day or equivalent.	18% GST (i.e. 9% CGST and SGST/UTGST each)	ITC available
Accommodation in hotels including five-star hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of a unit of accommodation of seven thousand and five hundred rupees and above per unit per day or equivalent.		28% GST (i.e. 14% CGST and SGST/UTGST each)	ITC available
Explanation. - “declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit.
Accommodation Service not covered above		28% GST (i.e. 14% CGST and SGST/UTGST each)	ITC available

The recent notification has brought major variation in the rate earlier prescribed in respect of food joints & restaurants. The notification has brought much needed relief asked for by the consumers. Now it is the responsibility of restaurant owners to pass on the benefits of rate cut to the customers. Though it is imperative that the restaurateurs has to adjust their menu prices to accommodate the increase of cost that would happen due to non-availability of ITC on inputs but it is now on their part to pass on the appropriate benefit of the rate cut to the customer. Otherwise, the Government is doing its own exercise to tighten the noose on those

who are indulging themselves in rate manipulation malpractices.

It is relevant to mention here that as per the provision of section 10 of CGST act any owner of restaurant or any food joint etc whose aggregate turnover in the preceding financial year did not exceed 150 lakh rupees, may opt for composition scheme and require to pay GST @ 5% ((i.e. 2.5% CGST and SGST/UTGST each) subject to such conditions and restrictions as may be prescribed. The details terms in respect of composition levy are separately provided in the act.

It is difficult for any business organization including restaurant to carry out their affairs without properly maintaining their accounts, hence to automatize of accounting process with the selection of small business billing software is the need of hour. Moreover, the restaurant should also look for such cloud based accounting software that are having good integrated billing features so that along with billing the task of accounting could also be performed.