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GST Calculation in Restaurants and Bars is Easy if You Know How

GST doesn't need to be confusing as we show you how to decode your restaurant bill

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Updated:August 22, 2017, 6:22 PM IST
GST Calculation in Restaurants and Bars is Easy if You Know How
GST Return Filing Date Extended till August 25 (photo for representation, image: News18)
The introduction of Goods and Services Tax aka GST has created some perplexity among restaurateurs, not to mention diners. Although the slabs are clearly stated in the GST portal and have been floated everywhere, many restaurants still are confused and end up applying rates and taxes according to what they interpret, whereas there are few of the others take undue advantage of the ignorance of people and charge the taxes according to their own wish.

As per Goods and Services Tax 2017, restaurants are divided into 3 categories for this purpose and accordingly the highest rate of 28% is levied on luxurious or 5-star hotels or restaurants in the same category, whereas A/C and alcohol-serving restaurants or restro-bars attract 18% GST and non-AC or non-alcohol serving hotels or restaurants are subject to 12% GST.

All restaurants can't charge GST, the only restaurants that are eligible for the same are those that are registered. You aren't required to pay GST if the business isn't registered. Make sure you check whether the restaurant you’re visiting is a registered one or not you can do so by checking the GST number which is usually given on the restaurant bill.

Also, in your bill, GST may appear twice since this total amount of GST is divided into two parts out of which one goes to the state funds i.e. SGST (State Goods and Services Tax) and the other part goes to the Central Government’s exchequer i.e. CGST (Central Goods and Services Tax). Diners must also check that if GST is applied multiple times in the bill under CGST or SGST heads, collectively it must not exceed the above mentioned 12%, 18% or 28% threshold and must charge equal portion. For example, if you go to a non-AC restaurant, the tax rate applicable is 12% so out of this total 12%, usually 6% is the SGST and 6% is the CGST.

Another point where diners are confused as to whether even after GST, do they have to pay VAT as well. The simple answer to this question is that in a restaurant GST is applicable on food and service only and VAT is applicable on alcohol.

Let's say, you went to a restaurant and your food bill is ₹1500 with a 10% Service Charge of ₹150 bring this total to ₹1650.

On the other hand, your bill for alcoholic beverages is ₹600, so in this scenario GST will be applicable on ₹1650 and VAT will be levied on ₹600 i.e. the alcohol bill only.

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