Impact of goods and services tax on restaurants

Impact of goods and services tax on restaurants

Managing Goods and Services Tax (GST) in a restaurant business in India involves several steps and compliance requirements. GST is a consumption-based tax, and restaurants must collect and remit GST on the services they provide and the goods they sell. Here’s a step-by-step guide on how to manage GST in your restaurant business:

GST tax
  • GST Registration:
    If your restaurant’s annual turnover exceeds the threshold limit set by the GST Council (which may change over time), you must register for GST. As of my last knowledge update in September 2021, the threshold limit for GST registration was Rs. 20 lakhs for most states and Rs. 10 lakhs for special category states.
    You can register for GST online through the GST portal (

  • GST Rates:
    Restaurants fall under the service sector category, and GST rates may vary based on whether your restaurant serves alcohol as of my last update: Non-air-conditioned restaurants: 5% GST.
    Restaurants serving alcohol: 18% GST.

  • GST Invoicing:
    Issue proper GST-compliant invoices for all sales, including food and beverages.
    Could you include the necessary details, such as your GSTIN (GST Identification Number), customer details, invoice number, and GST rates?

    GST Returns:
    File GST returns regularly. Depending on their turnover, restaurants must typically file GSTR-1, GSTR-3B, and GSTR-9 (annual return).

  • Input Tax Credit (ITC):
    Could you maintain proper records of input taxes paid on purchases? You can claim an Input Tax Credit on these purchases against the GST you collect from your customers.
    Could you ensure your suppliers are also GST-compliant and provide GST- invoices?

  • Accounting and Records:
    Maintain proper accounting records and invoices for at least 72 months.
    Use accounting software or hire an accountant to ensure accuracy and compliance.

  • GST Audit:
    If your turnover exceeds a certain threshold (e.g., Rs. 2 crores as per my last knowledge update), you may be subject to a GST audit. Please make sure your records are accurate and up to date.

  • Compliance with Anti-Profiteering Provisions:
    Please make sure that you pass on the benefit of any reduced GST rates to your customers by adjusting your prices accordingly.

  • GST Payment:
    Pay GST on time to avoid penalties and interest.
    Regular Training and Updates:
    Keep yourself and your staff updated on GST regulations, which may change periodically.

  • Seek Professional Advice:
    Consider consulting with a GST expert or a tax consultant specializing in GST for specific or complex tax-related matters.

  • GST Software:
    Use GST-compliant accounting or billing software to streamline GST compliance processes and reduce errors.

  • It’s crucial to stay informed about India’s latest GST rules and regulations, as they can change over time. Always refer to the official GST website and seek professional advice to ensure compliance with GST laws specific to your restaurant business.

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