GST DUNIYA. (Part – 10)

GST DUNIYA. (Part – 10)

GST on Restaurant services

Hope you had read the previous parts of the GST Duniya series, if not, then read it from here:

Part 1  Part 2 Part 3 Part 4 Part 5 Part 6 Part 7 Part8 Part 9


Today we will discuss about GST on Restaurant services

GST on restaurant services: We all know that most of us are very much fond of eating in restaurants. So now under GST Regime as tax rates are changed,It is important for us to understand the rates levy on restaurants. May be you are thinking that why we,as consumer,need to understand these rates. But let me clear friends that these rates automatically will affect our bill. So even as consumer, its crucial to learn about GST on Restaurant Services.

Before GST regime, restaurant charged certain taxes from consumers:

  • VAT- This is the tax charges on the food portion
  • Service tax-This is the tax charged on services provided by the restaurant
  • Service charge-This is not a TAX. It is a charge applied by the restaurants and not by government.

But now under GST regime, scenario of tax has been changed completely and it is important for both service provider as well as consumer to understand GST on restaurant services.

For better explaining this part, I am dividing the services into four categories:

  1. Non Air Conditioned Restaurant: Services of Non Air Conditioned Restaurant are

further divided into two parts:

  1. Restaurant not serving alcohol: 12% GST will levy
  2. Restaurant serving alcohol: 18% GST will levy
  3. Air Conditioned Restaurant: On services of air conditioned restaurant, either serving alcohol or not; 18% GST will levy.
  4. Partly AC and partly non AC : On services of restaurant, which is partly AC and partly non AC whether it is serving alcohol or not ; 18% GST will levy.
  5. 5 Star Restaurants: On 5 Star Restaurants, 18% GST will levy.


A common query raised by many readers is that how they are able to learn these different rates. So, just for sake of convenience, I am summarizing these above rates on restaurants:

On Services of Non Air Conditioned Restaurant not serving alcohol, 12 % GST will apply.

Except above, on services of all kind of restaurants, 18% GST will apply.

Another Impact of GST on restaurant services is Under the VAT regime, restaurant business owners did not have any option to adjust the output service tax liability with the credit of input VAT on goods consumed. However, under GST both these taxes will be subsumed into GST and thus credit of input will be available for adjustment against the output liability, irrespective of goods and services.


Under GST, restaurants with turnover upto Rs 75 lakhs can also opt for composition scheme. Some Benefits of opting Composite scheme are:

  • A registered taxpayer, who is registered under the Composite Scheme will pay tax at a rate not more than 2% for manufacturer, 5% for restaurant sector and 1% for other suppliers of turnover,
  • A service provider registererd under composite scheme is not required to maintain detailed records but a Composition Dealer is not allowed to avail input tax credit of GST paid to their supplier.


For detailed knowledge of composition scheme, you can read Part 4 of GST DUNIYA. Part 10 ends here. Hope, after reading this article, you understand the GST on Restaurant services. For further knowledge on GST, stay connected with us. Have A Happy Reading!


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