Curious to know the regular scheme in GST and how it works for restaurants? This guide covers everything about the GST regular scheme for restaurants, including the current GST rates for restaurants in India and how GST on restaurant services is calculated. Whether you’re a restaurant owner or a customer, understanding the GST rate for restaurants under the regular scheme is essential to managing costs and compliance.
The Goods and Services Tax (GST) has streamlined the taxation process for various businesses, including the restaurant industry. Understanding the GST rate for restaurants under the regular scheme is necessary for restaurant owners to ensure compliance and proper pricing.
GST Explained: What is GST and what are the different types of GST in India?
GST (Goods and Services Tax) is a single tax applied to the sale of goods and services across India. It replaced indirect taxes such as VAT, excise duty, and service tax. GST is divided into CGST, SGST, IGST, and UTGST, depending on the type of transaction. It helps create a unified tax system, reducing tax complexity. Businesses must register for GST and file regular returns as per government rules.
Understanding the different types of GST in India
Goods and Services Tax (GST) in India is categorized into four main types.
1. Central Goods and Services Tax (CGST)
- Imposed by the Central Government on intra-state (within the same state) transactions.
- Example: If a company in Delhi is selling a product to a buyer in Delhi, CGST is charged.
2. State Goods and Services Tax (SGST)
- Imposed by the State Government on intra-state transactions.
- Example: In the above case, the Delhi State Government will collect SGST.
3. Integrated Goods and Services Tax (IGST)
- Imposed by the Central Government on inter-state (between different states) transactions.
- Example: If a business in Punjab sells goods to a customer in Maharashtra, IGST is applicable.
4. Union Territory Goods and Services Tax (UTGST)
- Imposed by the Union Territory Government on intra-UT transactions (such as in Chandigarh, Lakshadweep, or Andaman & Nicobar Islands).
- Example: If a business in Chandigarh sells goods within Chandigarh, UTGST is applicable along with CGST.
What is the Regular Scheme in GST?
The GST regular scheme is compulsory for businesses that have a turnover above the prescribed limit. The businesses under this scheme are required to charge GST on sales, file regular returns, and avail input tax credit (ITC) on purchases. For restaurants, availing the GST regular scheme enables them to set off tax liability with ITC advantages.
GST Rate for Restaurants Under the Regular Scheme in India
Restaurants operating under the regular GST scheme are subject to different tax rates based on their nature and service offerings:
- Standalone restaurants (Non-AC and AC): 5% GST (without ITC)
- Restaurants in hotels (room tariff < ₹7,500 per night): 5% GST (without ITC)
- Restaurants in hotels (room tariff ≥ ₹7,500 per night): 18% GST (with ITC)
- Outdoor catering services: 18% GST (with ITC)
- Restaurants serving alcohol: Subject to both GST and state excise duties
Restaurant GST Rate Composition vs. Regular Scheme
Here are the key differences between the Combination Scheme vs Regular Scheme:
1. GST Regular Scheme
The GST Regular Scheme is for companies that have a turnover exceeding the composition scheme limit. It requires businesses to collect GST from customers and claim an input tax credit (ITC) on purchases.
Key Features:
- Compulsory for companies with turnover over ₹1.5 crore (for goods) or ₹20 lakh/₹10 lakh (for services, depending on state).
- Companies have to submit monthly/quarterly returns (GSTR-1, GSTR-3B, etc.).
- Input Tax Credit (ITC) can be claimed to reduce tax liability.
- Suitable for companies that deal with interstate sales and imports/exports.
2. GST Composition Scheme
The GST Composition Scheme is a simplified tax scheme for small businesses with lower turnover. It enables companies to pay a fixed rate of their turnover as tax without claiming ITC.
Key Features:
- Available for businesses with turnover up to ₹1.5 crore (₹75 lakh for some states).
- Service providers can choose if turnover is up to ₹50 lakh.
- Tax is paid at a fixed rate (e.g., 1% for traders, 5% for restaurants, and 6% for service providers).
- No Input Tax Credit (ITC) is allowed.
- Businesses must file quarterly returns (CMP-08) instead of monthly filings.
- Interstate sales are not allowed under this scheme.
Can Restaurants Charge GST from Customers?
Yes, restaurants registered under the regular GST scheme can charge GST from customers and must issue proper tax invoices as per GST invoicing rules for restaurants.
Various GST Rates Applicable to Restaurants
1. GST on Restaurants Serving Alcohol
For restaurants serving alcohol, GST applies to the food and beverage portion, while state excise duty is levied on alcohol. This makes the effective tax burden higher.
2. Restaurant Food HSN Code and GST Rate
The HSN Code for restaurant services is 996331, with tax rates varying as per the above conditions.
3 .GST Registration and Compliance for Restaurants
Restaurants must register for GST if their annual turnover exceeds ₹20 lakh (₹10 lakh for special category states). Compliance involves:
- Filing GST returns (monthly or quarterly)
- Maintaining invoices as per GST rules
- Calculating GST on restaurant bills correctly
4. GST on Dine-in, Takeaway, and Delivery Services
- Dine-in restaurants: 5% or 18% GST, depending on conditions
- Takeaway and delivery services: Generally taxed at 5% (without ITC)
5. GST Rate for AC and Non-AC Restaurants
Previously, AC and non-AC restaurants had different GST rates, but now both are taxed at 5% without ITC, unless part of a hotel with rooms above ₹7,500 per night.
6. GST Exemption for Small Restaurants
Restaurants with an annual turnover below ₹20 lakh (₹10 lakh for special states) are exempt from GST registration.
7. GST Filing for Restaurants in India
Restaurants under the regular scheme must file GSTR-1, GSTR-3B, and annual returns to ensure compliance.
Conclusion
Understanding GST compliance for restaurant owners is crucial to avoid penalties and ensure smooth operations. Opting for the regular GST scheme enables restaurants to claim input tax credits, but they must adhere to strict filing and invoicing guidelines. Proper knowledge of GST on food bills, restaurant tax slabs, and invoicing rules helps businesses remain competitive and legally compliant.
For expert guidance on GST registration, compliance, and filing, consult Link4Solution, your trusted GST advisory partner!
FAQs -GST Rate for Restaurants Under Regular Scheme
1. What is the GST rate for restaurants under the regular scheme?
Ans. The GST rate for restaurants under the regular scheme is 5% (without Input Tax Credit – ITC) for most restaurants and 18% (with ITC) for restaurants in luxury hotels (room tariff above ₹7,500 per night).
2. What is the GST regular scheme limit for restaurants?
Ans. Restaurants with an annual turnover above ₹20 lakh (₹10 lakh for special states) must register under the regular GST scheme and charge GST from customers.
3. What is the regular scheme in GST for restaurants?
Ans. The regular GST scheme allows restaurants to charge 5% GST without ITC or 18% GST with ITC, depending on their category. They must file regular GST returns.
4. What are the GST regular scheme rules for restaurants?
Ans. Restaurants under the regular GST scheme must:
- Charge GST on food bills as per applicable rates.
- File monthly or quarterly GST returns.
- Issue GST-compliant invoices.
- Maintain proper sales records.
5. What are the current GST rates for restaurants in India?
Ans. The current GST slabs for restaurant businesses are:
- 5% GST (No ITC) – Normal restaurants, takeaway, and delivery services.
- 18% GST (With ITC) – Restaurants in hotels with room tariffs above ₹7,500.
6. Can restaurants charge GST from customers?
Ans. Yes, restaurants registered under the regular GST scheme can charge GST on customer bills. However, those under the composition scheme cannot charge GST separately.
7. What is the GST rate on restaurant food?
Ans. The GST rate on restaurant food is 5% without ITC for regular restaurants and 18% with ITC for high-end hotel restaurants.
8. Is GST different for dine-in and takeaway services?
Ans. No, the GST on dine-in restaurants, takeaway, and delivery services is the same – 5% without ITC under the regular scheme.
9. What is the GST rate for AC and non-AC restaurants?
Ans. There is no separate GST rate for AC and non-AC restaurants. Both are taxed at 5% (without ITC) under the regular scheme.
10. Is there any GST exemption for small restaurants?
Ans. Yes, small restaurants with an annual turnover below ₹20 lakh (₹10 lakh in special states) are exempt from GST and do not need to register.
11. Which is the Right Choice for Your Business: Regular Scheme or Composition Scheme?
Ans.
- Regular Scheme is better for businesses with higher turnover and those needing ITC benefits.
- The composition Scheme is ideal for small businesses that want less compliance and lower tax rates.
12. What is the GST rate for restaurants serving alcohol?
Ans.
- GST on food in restaurants serving alcohol is 5% (No ITC).
- Alcohol is taxed separately under state excise laws, and GST is not applied to it.
13. What is the GST on restaurant services?
Ans. Restaurants providing food and beverage services are taxed at 5% (without ITC) or 18% (with ITC in luxury hotels).
14. What is the GST on restaurant food under the composition scheme?
Ans. Restaurants under the composition scheme pay 5% GST on total turnover but cannot charge GST separately on customer bills.
15. What are the restaurant GST billing rules?
Ans. Restaurants under the regular scheme must:
- Include GST in invoices.
- Mention the applicable GST rate (5% or 18%).
- Use GSTIN (GST Identification Number) on bills.
16. How to calculate GST on restaurant bills?
Ans. The formula for GST calculation:
Total Bill Amount = Food Cost + (Food Cost × GST Rate/100)
Example: If food costs ₹1,000 and GST is 5%, the final bill will be ₹1,050.
17. What is the GST rate for restaurant food HSN code?
Ans.
- The HSN Code for restaurant food services is 9963.
- The GST rate is 5% without ITC and 18% with ITC (luxury hotel restaurants).
18. What is the GST filing process for restaurants in India?
Ans. Restaurants under the regular GST scheme must file GSTR-1 and GSTR-3B monthly or quarterly. Those under the composition scheme file CMP-08 quarterly.
19. What are the GST compliance rules for restaurant owners?
Ans. Restaurant owners must:
- Register for GST if turnover exceeds the threshold.
- File GST returns on time.
- Issue proper GST invoices.
- Follow GST input tax credit (ITC) rules, if applicable.
20. How can restaurants apply for GST registration?
Ans. Restaurants can easily register for GST online through Link4Solution. They need to provide their business details, PAN, and necessary documents to complete the registration process.
