Restaurant Franchise Opportunities

GST On Food Jul, 12 2017

Hotels, Restaurants should reduce prices of food items after GST, says Hasmukh Adhia

GST will be levied on entire sum of food bill, including service charge, in a restaurant, while the value of alcohol or alcohol products consumed will attract VAT.

By Franchise India Bureau
Hotels, Restaurants should reduce prices of food items after GST, says Hasmukh Adhia

Revenue Secretary, Hasmukh Adhia, said that restaurants, hotels and eateries should cut rates on food items in their menu to reflect the benefit of being able to set off tax paid on inputs under GST.

He said, "GST will be levied on entire sum of food bill, including service charge, in a restaurant, while the value of alcohol or alcohol products consumed will attract VAT."

Previously, a service tax was levied on the bill. But the tax the hotel or restaurant operators paid on inputs could not be set off against the tax on final bill. This facility, called input tax credit (ITC), is available in the Goods and Services Tax (GST) regime.

In the GST Master Class, Adhia said, "Most of the restaurants should revise downward the rate charged on food items in their menu because of ITC which is now available. So ITC should be accounted for now in form of reduction in the value of supplies which they are giving."

Under the GST regime, while non-air conditioned restaurants attract 12 per cent tax, AC restaurants and those serving liquor will attract 18 per cent.

Adhia further said that anything that is served as part of restaurant bill will be subject to GST, barring alcohol on which Value Added Tax (VAT) will be levied.

He said, "On the entire value of food bill, including service charge, on that portion also GST will apply."

Adhia further said that the tax department has received representation for transition provision of lease service industry. As per the GST provisions, ITC will not be available for central excise already paid on cars which are on lease.

He said, "There are a lot of representations on this about transition for lease service industry. We are looking at the representation but we are not sure how to handle this."

Related: Junk food, food grains, confectionery items to become cheaper under GST

Click Here to add Comment
Please add your Comment
Rating
Sell Business 2017
Sell Franchise 2017
Most

Video

Magazines & Books

Read the latest franchising magazines and books to get comprehensive and up-to-date information on leading franchise systems, trends and more.

Newsletter Signup
Submit your email address to receive the latest updates on news & host of opportunities.
Restaurant India

Copyright © 2009 - 2017 Franchise India Holdings Ltd.

The information contained herein is of generic nature only, and Franchise India is not, by means of this website or any part thereof, rendering professional advice or services. Before making any decision or taking any action that might affect your finances or business, you should consult a qualified professional advisor. Your use of this website or any of its pages or links given, is at your own risk and you assume full responsibility and risk of loss resulting from your usage. With respect to use of the website, kindly visit www.franchiseindia.com/terms.