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GST rates for restaurants have been a matter of a lot of discussions and the rates on the same have undergone a series of change at 28th GST Council meeting. In this write up we will give a picture of the tax options available for restaurants under GST:
28th May 2021
As per the outcome of the 43rd GST Council meeting and CBIC notification,
(1) Interest relief has been provided for filing of CMP-08 for Jan-March 2021 quarter as per which, for any delay, interest is not charged until 3rd May, whereas 9% of reduced interest will be charged if filing is done thereafter until 17th June, and 18% later on.
(2) The due date to file GSTR-4 for FY 2020-21 is extended up to 31st July 2021.
(3) The maximum late fee for GSTR-4 that can be charged will be restricted to Rs.500 per return for nil filing and Rs. 2000 for other than nil filing.
1st May 2021
(1) The due date to file GSTR-4 for FY 2020-21 was extended from 30th April 2021 to 31st May 2021.
(2) Form CMP-08 that was due by 18th April 2021 for January-March 2021 has been given a relaxation in the interest charges. No interest for filing on or before 8th May, interest reduced to 9% between 9th May and 23rd May, but charged at 18% thereafter.
(3) The time limit to file ITC-03 by newly opted composition taxable persons for FY 2021-22 is extended up to 31st May 2021.
|S No||Type of Restaurants||GST Rate|
|1||Railways/IRCTC||5% without ITC|
|2||Standalone restaurants||5% without ITC|
|3||Standalone outdoor catering services||5% without ITC|
|4||Restaurants within hotels (Where room tariff is less than Rs 7,500)||5% without ITC|
|5||Normal/composite outdoor catering within hotels (Where room tariff is less than Rs 7,500)||5% without ITC|
|6||Restaurants within hotels* (Where room tariff is more than or equal to Rs 7,500)||18% with ITC|
|7||Normal/composite outdoor catering within hotels* (Where room tariff is more than or equal to Rs 7,500)||18% with ITC|
*This covers individuals supplying catering or other services in hotels (having room tariff of Rs 7,500 or more) and not any hotel accommodation services.
Restaurants are required to pay GST at a concessional rate of 5% on the turnover under the composition scheme subject to the following restrictions
|Particulars||Regular Tax Payer||Composite Tax Payer|
|Registration||Threshold limit – Rs. 20L||Threshold limit – Rs. 1.5 Cr|
|Territory of Business||No restriction on supply||Limited to Intra-State Supply|
|Switch from Regular to Composition or Vice versa||Compliance procedure is high||Once crosses the limit, compulsory registration under regular provisions|
|Input tax credit||Depends on the category||Not entitled to avail the credit|
|Business through e-commerce||Can supply goods through e-commerce||Cannot supply goods through e-commerce|
|Tax collection||Allowed to collect tax from the buyer||Cannot collect tax from the buyer|
|Tax invoice||Can raise a tax invoice for outward supply||Can raise Bill of Supply instead of Tax invoice for outward supply|
|GST returns||Monthly – GSTR 1 & GSTR 3B||Quarterly – Only GSTR 4|
Excise on the manufacture of pastries, service tax on accommodation and restaurant, VAT on restaurant, luxury tax on renting of rooms and entertainment tax on ticket events.
Entry Tax paid on machinery, CST on interstate purchases and excise paid on procurement of furniture and packaged foods were not allowed as credit to restaurant owners. With GST, all the taxes paid on such procurements are allowed as credit unless they are required to pay taxes at a concessional rate