Goods and services tax is applicable across the nation with simplified rules and regulations. But in case you are still doubtful 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 restaurant.
If you think that you are charged at a higher rate than it is supportive to know how GST is computed for the restaurant bills. You should learn what goes into them to make these bills sensible.
Service Charge- The service charge is not an obligatory fee that customers need to pay; it is not the law. Customers have the right to take the case to a consumer court if they feel that their fee has been levied inappropriately.
GST- Goods and services tax has been applicable at rates of either 5% or 18% on the total amount of the bill.
56th GST Council Meeting Update
An important update has been made under the 56th GST Council Meeting for restaurant taxes. They cited what ‘specified premises’ specify, which indicates that independent restaurants cannot organise themselves as ‘specified premises.’ Consequently, these restaurants could not opt to pay a higher GST rate of 18% benefiting from ITC. Rather, they shall carry to pay a lower GST rate of 5% without the ITC option.
This revision supports the earlier tax structure, where:
- A restaurant that is not located in a hotel, guest house, or other lodging with a daily tariff of ₹7,500 or more will charge a 5% GST without ITC.
- A restaurant located within a hotel or similar lodging with a daily tariff of ₹7,500 or more will charge an 18% GST with ITC.
In some recent scenarios, there have been some faults in the bills generated in the restaurants that must be understood by a responsible consumer.
Started on September 22, 2025, the updated GST system, which has the motive to make the taxes easier by using the two rates- 5% for essential items and 18% for most other goods and services. Consequently, many food items that are used by the restaurants, such as snacks, sauces, pasta, instant noodles, butter, and ghee, shall have a lower GST rate of 5%.
For restaurants, it is good news as it helps reduce their costs. It is essential to acknowledge that the 5% tax rate for dining services at restaurants remains applicable in many locations, as businesses are unable to claim deductions for the tax they pay.
Read Also: Meaning of IGST, CGST and SGST with Input Tax Credit Adjustment
This update seeks to facilitate the tax system, reduce classification disputes, and provide clearer guidance for businesses and consumers.
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
