Goods and services tax is applicable across the nation with simplified rules and regulations. But in case, if you are still doubts and are not sure about the generation of bills in a restaurant, you must be prepared to understand the changes included in the bill provided by the restaurants.
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- The Bhopal Consumer Court ordered a restaurant owner to pay INR 8,000 for charging INR 1 as GST on a ₹20 water bottle.
In case you are overcharged in such kind of situations, you must be aware of and understand the exact calculation of GST bills of restaurants. First of all, to understand the bills, there must be an understanding of the components of the bill.
- Service Charge – The service charge is not a legally bound tax implication on the customer, and therefore, he cannot be compulsorily charged with the service charge. A customer can anytime refer to the consumer court for such kind of charges.
- GST – Normally charged at a rate of 5% or 18% of the total cost of the bill.
Changes After the 23rd GST Council Meeting in Restaurants
Just after the GST council’s 23rd meeting, the announcement was made for relaxation in the GST rate of all the AC and non-AC restaurants. Earlier, there was 12 per cent GST on non-AC restaurants and 18 per cent on AC restaurants, which has been reduced to 5 per cent, making the services cost-effective for everyone. However, there is one condition to this rule.
Here it is.
If you are eating out in a restaurant that doesn’t offer the services of a hotel or guest house, you will be legally paying 5% GST on your purchases. However, if you are eating in a restaurant which is located in the premise of a hotel guest house, inn or any other lodging based commercial place with a daily tariff of Rs 7,500 or more per unit (room), then you will be liable to pay 18% GST, even if you are just using the restaurant services and not checking into the hotel.
The general public assumed that the food prices will get to see a reduction after the changes in tax rates but still the matter remain worse. In a recent case of the price hike, it was seen in most of the nationalized food chains which preferred an alternate way to tackle the tax rate reduction. As the tax rate was reduced, the food chains surged the price of these items individually, taking the tax instance same as it was earlier.
This change was felt in various parts of the country and was reportedly revealed on various social media websites. It is very problematic to see the adamant path taken by the food industry to continuously charge higher prices to the customers despite tax reduction at a mass level.
In some recent scenarios, there have been some faults in the bills generated in the restaurants that must be understood by a responsible consumer.
The bill depicts a service charge of 10% which is not in the laws of taxes and is a free concern of the customer to pay it or not. However, an extra CGST and SGST is also charged with the service charge at 9% each, which is completely illegal and unauthorized. The customer can move to the consumer court in this case.
Now, the accurately taxed bill shows, which is only deducting the authorized charges drafted in the rules of GST tax. The restaurant deducts a 9% CGST and 9% SGST from the bill cost, with no other subsumed charges.
Read Also: Meaning of IGST, CGST and SGST with Input Tax Credit Adjustment
After the implementation of Goods and Services Tax in India, all the aforementioned taxes are now subsumed into the one GST. The Government also mentioned the tax levy from different restaurant categories:
- Non-AC restaurants – 5% GST (CGST 2.5% + SGST 2.5%)
- AC restaurants – 5% GST
- Restaurant (AC or non-AC) located in hotel premises with Rs 7,500 or more daily tariff – 18%
- While pre-packed and pre-cooked food from restaurants – 12%
- Composition Scheme Restaurants – No Tax Applicable to Customers
Note: How to check if a trader is registered under GST or not by the simple online official portal. Check here: https://services.gst.gov.in/services/searchtp. You can also see the status of the trader, whether the organisation is registered as a regular or a composition.
Where to File the Complaint if the Trader Does GST Fraud?
- Email: helpdesk@gst.gov.in
- Phone: 0120-4888999, 011-23370115
- Twitter: @askGST_Goi, @FinMinIndia
Therefore, there is no highest slab of GST rate on the restaurants and they cannot charge 28% from their customers. The government department is also keeping an eye on the rates of food prices in the restaurants and has demanded that the eateries cut rates on the food supplied to offset the tax paid inputs and show benefits to the customers simultaneously.
