Table of contents
- A quick look into the GST history
- What is CGST, what is SGST, and what is IGST?
- What is the GST Composition scheme?
- GST on Restaurants
- GST on Bakery
- GST on Café
- GST on Bar
- The food GST encyclopedia
- Does GST apply to me?
- When is GST registration required?
- Other cases of GST registration mandatory for any turnover
- What is the process of GST registration?
- How can the SlickPOS billing system ease your GST filing?
A quick look into the GST history
GST is the standard tax system that was proposed in 2004. April 1, 2010, was set as the introduction date for GST and work commenced in implementing it. After various discussions and opinions, the Ministry of Finance passed the bill with amendments in the Rajya Sabha in 2017. Soon, it was implemented as an Act with the parliament’s approval and the President’s assent. This GST covers GST for restaurants, cafes, bakery, bars, various other sectors, and, in our case, food, beverages, and the other fields relying upon them. Due to this, day-to-day questions like GST on rice, GST on ice cream, GST on milk, GST on dry fruits, etc., have occupied the minds of people. These are discussed in this article where the GST for restaurant business, services, etc. are seen as per 2021.
What is CGST, what is SGST, and what is IGST?
There are three types of GST namely CGST, SGST, and IGST. CGST is the tax charged by the central government on the intrastate supply of goods and services. In the same way, SGST is the tax applied to the same intrastate supply of goods and services by the state government and IGST is Integrated Goods and Services Tax, which is levied for the interstate transfer of goods and services. The GST rate on food items and GST rate on restaurants is governed on the whole by the central government.
What is GST Composition scheme?
The composition scheme under GST means that a taxable person under a certain turnover has to pay tax at a lower rate concerning certain conditions. This scheme is developed for the timely recovery of taxes, filing of returns, and to provide a simplified way of record maintenance for small businesses.
Since the objective of the GST composition scheme for restaurants or any other business is basically to bring all businesses under one roof, this composition scheme will be provided to a taxable person only if he/she registers all the other registered taxable persons who are using the same PAN. It aids in the growth of the business as it doesn’t involve import-export of goods.
|Type of business||CGST %||SGST %||Total %|
|Manufacturers and Traders (Goods)||0.5||0.5||1.0|
|Restaurants that don’t serve Alcohol||2.5||2.5||5|
To switch from a normal taxpayer to a composition scheme holder, the taxpayer has to pay an amount that is equal to the credit of input tax, concerning the inputs held in stock on the day immediately before which the date of the switch is requested. The balance in input tax credit after the payment of this amount, if any in credit will lapse.
GST on AC Restaurants
The GST on restaurant food and services are levied differently for Air-Conditioned restaurants and non-AC restaurants as per the food, services, and addons they have to provide. The GST on restaurant services are as follows:
|GST for restaurant services||GST rates|
|GST for food services||5%|
|Services provided by restaurants in a hotel with a room tariff that is less than Rs. 7500||5%|
|Services which include room service and takeaway provided by restaurants in a hotel with room tariff equal to Rs. 7,500 or higher||18%|
|Food services provided at a premise/venue arranged for a function along with its rent||18%|
|Food services provided at event-based or occasional exhibitions, events, conferences, outdoor & indoor functions, etc.||18%|
|Food services which include delivery of food by a restaurant located within the premises of a club, guest house, etc.||18%|
GST on Non AC Restaurants
The GST for Non AC restaurants is quite similar to that of AC restaurants but the GST on food services is 5% due to the change in premise condition. Other than this, the GST on catering services is 18%, applying to all outdoor catering services that are provided individually or from a restaurant. This includes food trucks as well and the GST for food trucks is identical.
GST for Bakery
When it comes to GST on bakery items, the branded snacks sold are taxed at 12%, and other items like GST on bread is 0%, the pastries/cakes are taxed at 18%, etc. This means that different items have different food GST rates Hence, the final billing in a bakery comes at the consolidated value of all the items purchased.
Other than this, food items made using Tapioca and its substitutes like flakes, grains, pearls, etc. are taxed a GST of 5%.
GST on Café
The GST at Café is similar to that of a conventional restaurant. However, in the case of a Cafeteria/mess/canteen that operates on a contract basis at an office, industrial unit, school, college, hostel, etc. the GST levied is 5 %.
GST on Bar
In Bars and Pubs, the Alcoholic beverages that are sold, have a certain value of tax that comes along with them, which becomes the state-level tax. This is also called Value Added Tax. This makes bars or restaurants that serve food and alcoholic beverages levy their respective taxes separately. Thus, in simple terms,
- The food items provided in bars will only have GST.
- Alcoholic beverages on the other hand have VAT and GST.
Here, Alcoholic beverages and all other related products are taxed at 18%. Products that do not have a proper classification under the HSN are also taxed at 18%.
The food GST Encyclopedia
Rate of GST on Bread and related products
The GST for bakery items like Bread and other related products are as follows:
|Rate of GST on Bread and related products||GST rates|
|Bread (branded or non-branded), excluding those served for consumption and as pizza bread||0%|
|Mixes, doughs, pizza, Rusks, toasted bread, and other similar toasted products.||5%|
|Pasta (cooked/not cooked/stuffed), or prepared in other forms such as spaghetti, macaroni, noodles, lasagna, gnocchi, ravioli, cannelloni, couscous, etc.||12%|
|Waffles and wafers that are coated with chocolate or any ingredient containing chocolate||18%|
|Corn flakes, bulgar wheat, and similarly prepared foods obtained from cereal flakes||18%|
GST on Beverages
Beverages as a broad section comprise GST on tea, water, milk, coffee, coconut water, cold drinks, and every other non-alcoholic drink. In detail their GST values are as follows:
|GST on Beverages||GST rates|
|Water (other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized, and those sold in a sealed container)||0%|
|Non-alcoholic Toddy and Neera (includes date and palm neera)||0%|
|Tender coconut water other than those put up in a unit container||0%|
|Ice and snow||5%|
|Drinks containing milk and Soya milk||12%|
|Tender coconut water put up in a unit container, bearing a registered brand name||12%|
|Water (includes natural or artificial mineral water and aerated water, not containing added sugar or other sweetening agents or flavors of any kind)||18%|
|Vinegar and its substitutes obtained from acetic acid||18%|
The GST on cold drinks is quite different. Cold drinks comprise carbonated drinks and fruit pulp-based drinks. Here, carbonated drinks like Coke, Pepsi, and Sprite get a GST of 40% whereas similar drinks based on fruit pulp or juice get a GST of 12%.
GST on food items:
GST for food is based on many factors like location, type of establishment, service providers, etc. the Value Added Tax (VAT) and Service Tax has been replaced by GST, but restaurants have service charges separately. In specific, the GST for different food items is as the following:
|Food items||GST rates|
|Puffed rice (Muri), flattened or beaten rice (Chira), parched rice (Khoi), parched paddy, or rice coated with sugar or gur (Murki).||0%|
|Fresh and chilled vegetables which includes potatoes, onions, garlic, leek, etc. and dried leguminous vegetables packed in non-container (skinned/split).||0%|
|Fresh grapes, fresh/dried coconut, fresh/dried bananas, and plantain, fresh apples, fresh pears, etc.||0%|
|Meat (not in container whether fresh/chilled) and birds’ eggs in the shell (fresh/cooked/preserved).||0%|
|Vegetables packed in containers (uncooked/steamed/boiled) and vegetables preserved using brine or other methods that are unsuitable for direct human consumption.||0%|
|Unsweetened milk (pasteurised/unpasteurised), cream, etc.||0%|
|Meat packed in a container that has a registered trademark/brand name and birds’ eggs not in shell/egg, yolks that are boiled/cooked||5%|
|Dried leguminous vegetables packed in a container with a registered brand name (skinned/split or left as such) and Ginger (excluding fresh ginger), turmeric (excluding fresh turmeric), thyme, curry leaves, bay leaves, etc.||5%|
|Seviyan (vermicelli), khakhra, plain chapatti, or roti and edible items such as meal/powder of dried leguminous vegetables||5%|
|Vegetables, fruits, nuts, and edible parts of plants that are preserved/prepared using sugar and vinegar/acetic acid.||12%|
|Food prepared using flour, malt extract, etc. containing cocoa less than 40% of total weight along with chocolate, cocoa, and other related products||18%|
Recently, as per an industry insider, various regional beverage companies are looking forward to shifting to the 40% tax segment, as the pandemic has hit their margins.
By staying up to date on the latest changes of these GST charges, customers can make sure that the GST charged is right. At the same time, restaurants can make sure that their menu prices can be altered accordingly to suit their businesses.
Does GST apply to me?
1. GST on business
GST applies to all businesses like trade, commerce, manufacture, profession, vocation, etc. have GST, irrespective of their scale, volume, or frequency. This also includes the supply of goods and services for the start and termination of any business. At the same time, it is also to be noted that services & goods carry a different GST rate.
2. GST applies to everyone
GST applies to everyone from simple Individuals to HUFs, Companies, Firms, LLPs, AOPs, Cooperative societies, Trusts, etc. It is to be noted that Agriculturists are treated as an exception and GST isn’t applied to them. This includes people who are involved in agricultural activities like raising crops, floriculture, horticulture, sericulture, the raising of crops, etc.
Note: This doesn’t include dairy farming, poultry farming, stock breeding, fruit gathering, rearing of seedlings or plants, etc.
When is GST registration required?
Any business that gets a financial turnover of more than 20 lakh in a particular financial year falls under GST. This limit is also called the “Aggregate turnover” it includes the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services, and inter-State supplies of a person having the same PAN. If the business is placed in a special category state, the Aggregate turnover limit lowers to 10 lakh.
If the Aggregate turnover falls less than the set limit, the business/individual is exempt from GST and need not pay the GST. This is also called the GST exemption.
Other cases of GST registration mandatory for any turnover
- For individuals/businesses involving in inter-state supply of goods/services.
- Anyone who supplies goods/services in a taxable territory of India and doesn’t have a fixed place of business is termed as a casual taxable person and gets the GST registration. This registration is valid for 90 days.
- Anyone who supplies goods/services and doesn’t have a fixed place of business in India is referred to as a non-resident taxable person. This kind of GST registration is valid for 90 days.
- Anyone who is supposed to pay tax under the reverse charge mechanism gets a GST registration. Here, the reverse charge mechanism is the mechanism where a person who receives the goods/services pays tax instead of the supplier.
- GST registration is mandatory for Agents or any other individuals who supply goods/services on behalf of another registered taxable person.
- GST registration is mandatory for distributors or input service distributors as they have the same PAN as that of the office of the supplier.
- Any E-Commerce Operator or individuals who supply goods/services via an e-commerce operator, excluding branded services.
- For aggregators supplying goods/services under their brand name.
- Individuals providing online information, access to the database, and retrieval services from anywhere outside India to a person inside India, other than a registered taxable person should mandatorily have a GST registration.
What is the GST registration process?
For GST registration of a new restaurant, you’ll have to fill in the GST REG – 01 registration form. This can be done in the GST Portal which requires the submission of your documents and other basic details like email, mobile number, PAN, etc. This kind of return is filed monthly or quarterly, except for small businesses where the turnover is up to Rs. 1.5 Crore in the previous financial year.
How can SlickPOS billing system ease your GST filing?
When it comes to running a business and especially a food-based business, like a restaurant, bakery, or café, it is very much necessary to keep proper track of the inflows and outflows. The varying GST values of different items are also to be noted. Hence, having good billing software is the best way to keep things clear when it comes to income, expenditure, and GST of the business. As a prime billing software, we at SlickPOS:
- Work with different products as per the taxes and keep things organized.
- Support the CGST and SGST tax groups, providing the necessary analytics.
- Prepare monthly reports with the tax break up.
- Handle the cancellations that occur periodically and keep your tax flow updated.
- Provide you with daily/monthly tax reports/invoice-wise tax reports.
Other useful articles
If you are starting your first food business, start with knowing about FSSAI, its rules, and regulations.
For neat guidance on how to run a restaurant, check out the ‘Start to Success‘ article.
If you are eyeing improvement, check out these 5 ways to increase restaurant sales.
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