Disputes on restaurant’s bill? GST impact consumers need to understand

Don’t confuse with your restaurant bill post GST, different rates for these services could create dispute among customers and restaurant owners. The GST Council has fixed multiple rates for restaurant services based on different variables – AC or non-AC, turnover amount, luxury category.

GST, which came into effect on July 1, subsumes 17 indirect taxes and 22 cesses at different rates across different states. Your bill before this tax reform had 3 prominent entries.

So how does GST impact your restaurant outing? What does it mean for the restaurants business? Will you have to take a bigger hit on your pocket? Here is what GST will mean for restaurants and food outings.

  1. Service charge: Service charge is not a tax, and therefore, restaurants are not legally bound to enforce it. The amount of service charge a restaurant levies is entirely at its own discretion. Typically, 10% is charged, and it is mentioned on the menu. You can always move a consumer court if the restaurant charges for service.
  2. Service tax: This is a charge applied by the restaurants and not by the government. THIS IS NOT A TAX. It should not be confused with service tax as this is an income to the hotels. Service tax is not an income and merely a tax collected from you and submitted to the government.
  3. Value Added Tax: This is the tax charged on the food portion of your bill.

GST impacts your restaurant bill

GST regime divides restaurants into two categories–air conditioned and non-air conditioned. In addition to that, there are sub-categories for establishments that are part AC, those that serve alcohol or don’t serve alcohol and five-star restaurants.

All transactions will be reported & expenses will be recorded, Restaurateurs will increase transparency in business & increase profits over the long run.

Impact on End Consumers

Hence, we can say that the new tax seems to benefit both the consumer and the business owner.