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Another GST Shocker for Restaurant Owners & Diners: Take Away Parcels Attract 18% GST

According to a latest statement released by the CBEC (Central Board of Excise and Customs), even though the rate of tax to be paid by non-AC restaurants is 12% and for AC establishments the tax is 18%, any food that will be bought as a takeaway from the non-AC Section of a restaurant that has both AC as well as non-AC Section, will be levied GST of 18%.

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Updated:August 16, 2017, 6:44 PM IST
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Another GST Shocker for Restaurant Owners & Diners: Take Away Parcels Attract 18% GST
(Photo: Reuters/Image for representation.)
As per the latest tax rules being followed post GST roll out on July 1st 2017, 12% GST is levied on food bill in non-AC restaurants, 18% GST for AC restaurants and those with liquor license, and 28% GST for 5-star hotels and restaurants in the same. As it is there’s a lot of confusion and even more discontentment in the consumers as well as businesses towards GST. According to a latest statement released by the CBEC (Central Board of Excise and Customs), even though the rate of tax to be paid by non-AC restaurants is 12% and for AC establishments the tax is 18%, any food that will be bought as a takeaway from the non-AC Section of a restaurant that has both AC as well as non-AC Section, will be levied GST of 18%, which will be borne ultimately by the consumer.

The popular case of an establishment having both AC as well Non-AC is restro-bars who have AC dining and bar at their first floors and non-AC dining and popularly takeaway at the ground.

The CBEC mentioned "If any part of the establishment has a facility of air conditioning, then the rate will be 18% for all supplies from the restaurant,"

"Tax has to be charged at 18% on supplies of food made from their takeaway counter."
Such restaurants are also not eligible for composition schemes as they supply liquor in their premises.

Another such concept is followed by the fast-food joints who have AC dining as well as Non-AC or open areas for self service. The people who dine in the AC section are aware that they will be overcharged by the restaurant, however to make things worse, the burden of 18% GST also has to be borne by them.
Now technically for a consumer who is not eating at such a restaurant and is taking away the food isn’t enjoying the AC and thus he should be charged the non-AC rate of taxation at 12%. However, according to the above statement cum clarification issued by the CBEC they have specified that in case of such a takeaway service being availed by the customer in a restaurant whose any part is AC, the consumer will be subject to the luxury AC-dining rate of 18% and not 12%.
Merely separating the AC & non-AC section will also not help as the CBEC looks at adjacent units as one thereby denying the non-AC smaller unit the tax relief. The only way will be to open a different outlet altogether and name it differently. A good example for people travelling to Delhi NCT could be Amrik Sukhdev AC & Amrik Sukhdev Non-AC.
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