GST on Food - All You Need To Know
The tax on food services and products in India can be 5%, 12% or 18%, depending on a variety of factors that include among others type of establishment and the location of the restaurant/provider of food services The implementation of the GST in food services replaced the previous VAT regime and the service tax, however, the service charge implemented by the restaurants is independent of the GST.
It is important that alcoholic beverages still come under the VAT taxation system, which is a state-level tax so restaurants that serve both food and alcoholic drinks will have separate taxes with GST tax applicable to food and non-alcoholic drinks, while VAT tax will be applied to alcoholic beverages served. In addition to food services, the GST in food is also applicable to foods purchased by the common man who currently has rates ranging from zero to 18% GST.
GST in food services
The following are the key rates applicable to GST in food services *:
- 5% GST on food services provided by restaurants (both with air conditioning and without air conditioning).
- 5% GST in restaurant services, including room service and takeaway provided by restaurants located inside a hotel with room rate below Rs. 7,500
- 5% GST on meals/food services provided by Indian Railways / IRCTC or its licensees on both trains and platforms.
- 5% GST applicable on any food/drink (non-alcoholic) served in the cafeteria/dining/canteen room that operates by contract in the office, industrial unit, school, university, hostel, etc.
- 18% GST in restaurant services, including room service and take-away food provided by restaurants located within a hotel with room rate above Rs. 7,500
- 18% GST on food services, including food delivery given by a joint meal/restaurant located around the premises of a guest house, club, etc.
- 18% GST on all outdoor catering services provided.
* The list is indicative and rates are subject to periodic changes.
GST in food products
- The following are the key GST rates applicable to some common foods *:
- Null GST in fresh and chilled vegetables, including potatoes, onions, garlic, leek, etc.
- NIL GST in dried legumes without wrap (without skin), without skin, divided or not
- Null GST in fresh grapes, fresh/dried coconut, bananas / fresh/dried banana, fresh apples, fresh pears, etc.
- Null GST in meat (not in a container, either fresh or chilled)
- Null GST in poultry eggs in the shell (fresh / cooked/preserved)
- Null GST in unsweetened milk (pasteurized / unpasteurized), cream, etc.
- Null GST in vegetables packed in containers (uncooked / steamed / boiled)
- Null GST in vegetables preserved with brine / other means not suitable for immediate human consumption
- 5% GST in meat packed in a registered trademark/brand name container
- 5% GST in poultry eggs that are not in shell / boiled or steamed egg yolks
- 5% GST in dried leguminous vegetables packed in containers with registered trademark (skinless / divided or not)
- 5% GST in ginger (excluding fresh ginger), turmeric (excluding fresh turmeric), thyme, curry leaves, bay leaf, etc.
- 5% GST in foods such as flour / dried vegetable powder
- 12% GST in vegetables, fruits, nuts and parts of edible plants preserved with sugar
- 12% GST in vegetables, fruits, nuts and parts of edible plants that are preserved/prepared with vinegar / acetic acid.
- 18% GST in food preparations such as those prepared with flour, malt extract, etc. containing cocoa less than 40% of the total weight.
- 18% GST in chocolate and other cocoa products
The list is indicative and rates are subject to periodic changes. For a detailed list of GST rates on various food products, use Paisabazaar's GST rates and the HSN / SAC code finder.
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Impact of GST on food
After the implementation of GST, those who ate in restaurants have witnessed a simplification of the invoice as GST replaced a multitude of taxes and assignments, such as VAT, Service Tax and the cessation of Krishi Kalyan, to name Some. After the implementation of GST in food, a decrease in the effective tax on restaurant bills was also evident to customers. But it was observed that the decrease in the cost of eating out for customers was marginal at best. In addition, GST has not affected the service charge applied by the restaurant, therefore, the customer still pays it in addition to the GST on food.
For restaurant owners, the availability of tax credit (ITC) after the GST implementation was expected to increase the availability of working capital for restaurants. Later, amendments were made that reduced the ITC benefit for restaurant owners. However, it is notable that, according to current GST rules, this ITC benefit is available only to those who charge 18% of GST, while restaurants that charge 5% of GST on food services do not receive benefits. from ITC.
In terms of GST in food products such as vegetables, fruits, meat, etc., a zero GST exemption has been granted, that is, in the case of most fresh and frozen products. It is only in the case of food packaged in branded containers that other GST rates are applicable. So far, the GST in food items or food services does not exceed 18% and so far there are no food items in the highest tax category of 28%. As a result, there have been no significant increases/decreases in prices subsequent to the implementation of the GST in food.