Impact of GST on Food Bills

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A new indirect tax regime is set to replace the old indirect taxation system in India. A new single goods and service tax(GST) will be collected on goods and services instead of multiple indirect taxes such as excise duty, central sales tax(CST), value-added tax(VAT) etc. As the government seeks to roll-out GST by July 1, people are curious to know its impact on their food bills. The Goods and Service Tax Council finalized different GST rates for restaurants and hotels based on their tariffs, turnover, and facilities. Following are the different taxes or the GST, that people will have to pay at different places.

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For Restaurant:

Non-Ac restaurants will be levied a tax rate of 12 percent.
Ac restaurants will be levied a tax rate of 18 percent.
Five star and above restaurants will be levied a tax rate of 28 percent.
Restaurants with a turnover of less than Rs 50 lakh will be levied a tax rate of 5 percent.

For Hotels:

Lodges and hotels will tariffs less than Rs 1,000 will be levied nil or 5 percent tax rate.
Hotels with tariffs between Rs 1,000 – Rs 2,500 will be levied a tax rate of 12 percent.
Hotels with tariffs between Rs 2,500 – Rs 5,000 will be levied a tax rate of 18 percent.
And hotels with tariffs above Rs 5,000 will attract a tax rate of 28 percent.

Currently, Restaurants charge 6% service tax including Krishi Kalyan and Swachh Bharat cess, 5% – 20% VAT and normally 10% service charge, which is optional now after the government new announcement in April 2017.

So people especially students who want to dine out cheap, head over to a Non-Ac restaurant to save tax. GST is expected to lower down the restaurant’s bills in most cases.

 

 

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