At the stroke of midnight on 30th June, the country officially changed over to the GST. Or, as PM Modi likes to call it, The Good and Simple Tax. The benefit of this fiscal policy change coming on a Saturday is that you can sit back and take a bird’s eye view of the number crunching that is going around. At ClearTax, this is what we have been doing all day. And the first evidence of an economy changing its slow gears is seen in the invoices that are being generated countrywide. Oh yes! On this, the first day of GST, bills of all shapes and sizes are pouring in, and it makes for quite a unique study.
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For instance, if you decide to indulge your weekend laziness and order in great food, you will find that not all restaurants are generating their invoices the right way. To be fair though, most of these places are charging the right amount of tax but their UI does not show the right breakup. These websites were designed to show only a single VAT charge, but now they are required to show both CGST and SGST charges.
Some restaurants have not yet updated their mobile sites and websites to show the new tax rates and breakup. While some restaurants have decided to either show only a CGST or an SGST charge on the amount paid, others have decided to go ahead with a non-denominational ‘Taxes’ without showing a proper bifurcation of the taxes charged. If you are ordering on your smartphone, you might see this happening quite often.
The GST charged on food delivery should be divided into two: the state component (SGST) and the Central component (CGST). The rate of tax depends on whether the restaurant is a non-AC or AC restaurant, and the total GST is equally divided between the two heads. However, many websites still seem to be unaware of this, and have decided to go by the operable word of ‘taxes’.
If you don’t mind spending your siesta hours digging out your old Casio calculator and remembering high-school math, you will see that the tax added is correct in all cases. But, the fact that these websites are not showing the tax breakup has caused confusion among food lovers all over. In fact, it’s even taken social media by storm! As in the below case, customers are sometimes left wondering if they are being charged extra on their orders.
As the voice from Coldplay once crooned, “nobody said it was easy, but no one ever said it would be this hard.” Apart from the fact that not all food delivery websites have updated their systems, there seems to be a slight ignorance about the rates that need to be charged. While the idli shop down the road thinks it needs to charge 18% GST, the AC pizzeria in the posh part of town is wondering if 12% is enough. To help everyone out there caught in the maelstrom, here’s the lowdown on the GST rates for the food and beverage sector:
Despite the unintended goof ups, it is heartening to see the food and beverage industry gear up for the new tax system from day one. Teething troubles like these are part and parcel of a fiscal policy change, but the solutions are readily available, too. Fintech companies like ClearTax have created an easy-to-use BillBook software which can help SMEs across verticals generate the correct invoices and show the tax breakup to their customers. Currently, the ClearTax GST Billbook is available free of charge on the Cleartax website. The company, which is also India’s biggest online tax filing platform, aims to make India GST-ready with its cloud-based software solutions and by providing offline utilities like CA-assisted return filing, video tutorials for GST, and webinars etc. Apart from this, ClearTax also recently released the country’s first ready-to-use GST software which promises to be the one-stop solution for all GST needs. And to give credit where it’s due, let us also acknowledge the ones who got the new tax breakup correct the very first day (screenshot below). And to ones who didn’t, don’t worry! We’ve got your back.