Is GST Applicable on Takeaway Food Purchased from Restaurants?

GST, the Goods and Services Tax, has brought significant changes to the billing and tax structure for restaurants and diners in India. But what about takeaway food? Does the service fall under the GST regime, or is it exempted? Let’s delve into the details.

GST Rates for Restaurants

The application of GST on takeaway food depends on the registration status of the restaurant and the category it is under.

If the restaurant is registered under the composition scheme: The applicable GST rate is 5%. If the restaurant is under the general category: If the hotel is associated with a room tariff up to 2499/-, the GST rate is 12%. If the hotel is associated with a room tariff between 2500/- and 7499/-, the GST rate is 18%. If the room rent is above 7500/-, the GST rate is 28%.

These rates apply regardless of whether the food is served at the restaurant or taken away.

Earlier VAT and Takeaway Food

Before the implementation of GST, VAT (Value Added Tax) was not applicable on takeaway food from restaurants. However, the seller would consolidate the amount, and the purchaser would pay without a detailed bill. This was done to keep takeaway food costs lower and to simplify the seller’s billing process. Nevertheless, it was observed that no tax was actually applied to takeaway orders.

It is important to note that VAT and service tax were always charged on restaurants, regardless of whether food was served on-site or delivered. Just because the taxes were not explicitly mentioned on the bill, it does not mean they were not included in the final price. It’s possible that restaurants were not declaring their sales before, but GST has now forced them to be more transparent.

Tax Rates for Five-Star Restaurants and Air-Conditioned Rooms

Five-star restaurants or those serving food in an air-conditioned room fall under a different tax bracket, with a GST and SGST (Central and State Goods and Services Tax) rate of 9%, totaling 18% on the final bill.

For other restaurants:

Restaurants with AC: The GST rate is 18%. Non-AC restaurants: The GST rate is 12%.

It is crucial to note that there is no differentiation between takeaway and dine-in orders when it comes to GST. The rates apply uniformly to both.

Frequently Asked Questions

Are takeaway orders subject to GST? Yes, takeaway orders are subject to GST. The applicable rate depends on the restaurant's registration status and category. Will the cost of takeaway food increase after GST implementation? Yes, due to the addition of GST, the cost of takeaway food might increase, but the extent of the increase depends on the restaurant’s category. How transparent are restaurants regarding the GST rates? Restaurants are required under the GST regime to be more transparent about their billing and tax structure. There is no room for hidden taxes or consolidation of amounts.