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Decode the GST Bill Correctly Next Time When You Visit a Restaurant

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About Goods and Service Tax

Since the application of the Goods and Service Tax (GST) from July 1, many consumers are left perplexed at what is the big deal with this.

Despite the obviously increased rates of goods and services throughout the country, some business organizations are not providing the few privileges of GST to the mass.

In spite of the several warnings from the government, many businesses are continuing to charge ridiculous rates for their service obstructing the consumers to avail the benefit.

How did the restaurants tax us before?

To avoid getting overcharged by the restaurants you visit, understand the working of the current GST. Previously, the bill consisted of VAT, Service Tax, Krishi Kalyan Cess (KKC), Swachh Bharat Cess (SBC) and Service Charges (by some restaurants).

VAT was charged on the food consumed by the customers whereas Service Tax was applied to the services provided by the particular restaurant and the government had nothing to do with it. Also, the VAT rate varied from state to state.

How will the restaurants tax us now?

After GST, there is no separate Service Tax or VAT left to be charged; everything is included under GST. The Centre has explained the working of GST according to the following rates applied to different types of restaurants:

  • AC restaurants that serve liquor and don’t serve liquor should charge 18%
  • Non-AC restaurants serving liquor should charge 18%
  • Non-AC restaurants not serving liquor should charge 12%
  • Pre-packed and pre-cooked food items should charge 12%

Note that the aforementioned table of tax is applicable to restaurant supplies under different circumstances. The actual GST situation would be a lot lesser because of the extended availability of input tax credit. Also, keep in mind that no restaurant is privileged to tax 28% on the food items.

The government has specifically asked the eateries to reduce rates on food to showcase the benefits of customers by decreasing their payment of tax on inputs under GST.

Don’t forget the exception

Liquor has been excluded altogether from the policy of GST. Hence, when you visit a restaurant and order both food and liquor, then the GST will be applied only on the food items consumed and you should receive a separate VAT bill for the liquor.

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