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.
- 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.
- 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.
- 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.