Impact of GST on Restaurants – Know about The Impact of GST on Food Industry


The Chief Economic Adviser to the Indian Government headed a committee in 2016 which had recommended a two slab tax structure for the GST. However the committee had initially recommended for a two slab tax structure which should have a low rate tax slab and a standard rate tax slab.The final proposal which came from the committee was a single rate tax structure.

If we see the GST structure across the globe most of the countries have adopted a single tax rate. For example, GST for Singapore is 7% while for Australia it is set for 10%.

The all powerful GST council headed by Mr. Arun Jaitely (Finance Minister) have finally approved a four slab tax rate of 5%, 12%,18% and 28% respectively as per the type of goods and services and has ultimately set up the final platform for the GST implementation.

Change in Registration value for Restaurant Taxation under New GST implementation

Restaurants have the compulsion to go for VAT registration once their business has crossed a turnover of more than 5 lakhs to 10 lakhs annually in the present taxation regime.

With the implementation of GST, it would be a good news for Restaurant owner who have an annual turnover of less than 10 lakhs in North eastern states and Rs 20 lakhs in other states as

Is GST going to effect the Restaurant food cost?

Believe me, you would definitely love to eat Restaurant food under the new GST regime. The present Indian food Industry is of Rs 2,47,680 crore and is projected to grow to Rs 4,08,040 crore by 2018, providing a much bigger opportunity for new restaurant players.

The food service industry has shown a rapid growth till date and is projected to grow at a much higher pace under this new GST regime as the service tax and VAT amount will be sub summed into a single tax. You might find a service charge too in your bills.

Present taxation rate vs Post GSTRate

The spices, tea, coffee and mustard oil which are taxed at 3 to 9 percent will be put back in the first slab of 5% tax rate.

The processed food items which fall in the range of 9% to 15% in the present taxation regime will be in the second slab of 12% in the new GST regime.

Finally, the restaurant which is serving liquor and aerated drinks will now have to have to pay 28% tax rate plus cess will be charged for sin products. Cess will be levied on top of the higher tax rate.


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