Love to eat out? Be ready to pay GST at THIS rate as new regulations take effect
Do you love to eat out often? Remember that the latest rates of Goods and Services Tax (GST) took effect on April 1. As per the new rates, customers may have to pay either 5 per cent or 18 per cent based on where the restaurant is located and whether it is part of ‘specified’ premises or not. Here are the details.
Restaurant bill: Three GST rate options
1. When it is a standalone restaurant, a GST rate of 5 per cent will be applicable. There will be no input tax credit (ITC) available.
2. When it is located on hotel premises.
A. Qualified as specified premises: When it is qualified as specified premises, the GST rate of 18 per cent will be applicable.
B. Not qualified as specified premises: When it is not qualified as specified premises, the GST rate of 5 per cent will be applicable.
What are specified premises?
When the value of supply of any unit of accommodation is more than Rs.7,500 per unit per day or equivalent in the preceding financial year, it becomes a specified premises in the subsequent financial year.
For example, large hotels such as Taj, Lalit, and Hyatt will always be specified premises and therefore, the GST rate will always be 18 per cent with ITC.
Other hotel accommodations have the option to be specified premises after filing a declaration in annexure VII (GST will be 18 per cent with ITC) or not (GST rate will be 5 per cent).
