How GST impacts your restaurant bill ?

So how does GST impact your restaurant outing? What does it mean for the restaurants business? Will you have to take a bigger hit on your pocket? Here is what GST will mean for restaurants and food outings.

What does it mean for the common man?

Before GST was brought in, there were a number of taxes in your restaurant bill. Service Tax, VAT, Krishi Kalyan Cess and Swachh Bharat Cess were levied. A total tax of around 20.5% on you restaurant outing was applicable under the VAT regime. Restaurants used to levy 10% service charge. That could be ignored since it’s not a tax levied by the government. But, the restaurant owners would include the service charge in the bill and apply service tax on that service charge too. Since the levy of service charge is not banned and is made voluntary for customers, it can still be included in the bill. Therefore, in the new regime, the customers will pay a single tax on the total food bill and additional service charge if they wish to.GST regime divides restaurants into two categories–air conditioned and non-air conditioned. In addition to that, there are sub-categories for establishments that are part AC, those that serve alcohol or don’t serve alcohol and five-star restaurants. GST rates and how they apply: Non-air conditioned establishments: The establishments that don’t serve alcohol will charge GST at 12% (Central GST at 6% and State GST at 6%) while the ones that do serve alcohol will charge 18% GST (9% CGST and 9% SGST) Air conditioned, partly air-conditioned, five-star: These establishments will charge GST at 18% (9% CGST and 9% SGST) regardless of the alcohol availability for patrons. So this brings the tax on restaurant outings down from 20.5% to 18%. In short, the taxes applicable before GST were:VAT, depending on state=12.5% to 14.5%Service Tax, considering 60% abatement on 15% standard rate = 6.0%Krishi Kalyan Cess = 0.2%Swachch Bharat Cess = 0.2%Total Effective Tax = 18.9% to 20.9% Previous vs. GST regime comparisonA quick GST calculation for restaurants will reveal a clearer picture. If we consider non-AC restaurants, we can comfortably come to the conclusion that the rates have reduced, as only VAT in the range of 12.5% to 14.5% was chargeable, whereas the GST rates on restaurants in the non-AC category is 12%. Even if someone goes to an AC dine-in, and does not have alcohol, the GST rates on restaurants are still more or less the same at 18%. However, a 5 star hotel is surely bound to be a costlier affair.But still, many restaurant goers are unhappy with the GST rates on restaurants. The reason is the presence of yet another component – the Service Charge! .