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The new indirect taxation law, Good and Service Tax (GST) benefitted the food and beverage industry. Prior to this GST law, a consumer has to give a number of taxes including Value Added Tax (VAT) and Service tax over and above the food value. After the implementation of the GST law, only one tax is levied on the consumer by the Central government and State government. However, it should be noted that the service charge is a charge that is applied by the restaurant and it is not a TAX. Further, it should be noted that alcoholic beverages will not come under the ambit of GST and will attract VAT. Along with the food services, GST will also be applicable to the food items which are bought by the society ranging from Nilto 18% GST.
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As a customer, we barely pay attention to our food bill and also we are not aware of which components we are been taxed. If we remember our bill from the restaurant prior to the implementation of GST, we will witness that there are number of charges are added over the food amount such as Value added tax, Service Charge, and Service tax.
The Goods and Service Tax on the services relating to the food can be categorized into three slabs: 5%, 12%, and 18% depending upon many factors but not limited to the location of the food service provider/Restaurants.
The following are the GST rates applicable to the food Services:
The following are the GST rates applicable to the food Items:
After the implementation of GST, the consumer of restaurants has evidenced a straightforward bill without the number of taxes. GST has substituted a multitude of cess and taxes including VAT, Service tax, education cess, Krishi Kalyan cess etc. Subsequent to the GST cost of the bill in restaurants have witness a decrease and further an increase in the customers.
For the owners of restaurants, the further accessibility of input tax credit (ITC) leads to increase in the working capital availability for the owner of the restaurant. However, later amendments’ are made to reduce the benefits of the restaurant owners. As of yet, the rate of GST on food and beverage services and the food items does not surpass 18% as a result, there is no major price hike has been witnessed after the implementation of the GST.
Read our article:What are the Income Tax Laws for Startups in India
Rajdeep is a law graduate from Guru Gobind Singh Indraprastha University. During his law school he gained vast experience in corporate and commercial law. He likes traveling and performing stand-up comedy.
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