Goods and
Services Tax (GST) compliance for restaurants in India is governed by the Goods
and Services Tax
Act, 2017. Here are some key aspects of GST compliance for
restaurants:
1. Registration
Restaurants in India are required to
register for GST if their annual turnover exceeds the prescribed threshold. The
threshold is currently INR 20 lakh for most states, while special category
states have a lower threshold of INR 10 lakh. Registration can be done online
through the GST portal by providing the necessary details and documents. Once
registered, the restaurant will receive a unique Goods and Services Tax
Identification Number (GSTIN).
2. GST Rates
The GST rates applicable to restaurants
depend on the type of establishment and the services they provide. There are
mainly two types of restaurants based on their turnover and the availability of
Input Tax Credit (ITC):
a. Non-AC Restaurants and
Restaurants without the facility of serving alcohol: These restaurants fall
under the composition scheme. Under this scheme, they pay GST at a lower rate
(currently 5% as of September 2021) on their turnover. However, they are not
allowed to claim Input Tax Credit (ITC) on the GST paid for their inputs.
b. AC Restaurants and
Restaurants serving alcohol: These restaurants do not fall under the
composition scheme. They pay GST at a standard rate (currently 18% as of
September 2021) on their supplies of goods and services. These restaurants are
eligible to claim ITC on the GST paid for their inputs, such as raw materials,
rent, equipment, etc.
It's important to note that
the GST rates and classification of restaurants may be subject to change based
on government notifications. Therefore, it's advisable to check the latest
rates at the GST portal or consult a tax professional for accurate information.
3. Invoicing and Record Keeping
Restaurants are required
to issue GST-compliant invoices for their supplies of goods or services. The
invoices should contain details such as the GSTIN of the restaurant and the
customer, description of the goods or services, quantity, value, applicable GST
rate, and the amount of GST charged. Proper record keeping is crucial, and
restaurants should maintain books of accounts, invoices, and other relevant
documents for a minimum period as specified by the GST Act.
4. Filing GST Returns
Restaurants need to file regular
GST returns to report their business transactions to the tax authorities. The
key GST returns for restaurants include:
a. GSTR-1: This return
contains details of outward supplies made by the restaurant. It needs to be
filed either monthly or quarterly, depending on the turnover.
b. GSTR-3B: This is a summary
return that includes details of sales, purchases, and GST liability. It is
filed monthly and serves as a provisional return.
c. GSTR-9: This is an annual
return that consolidates the information provided in GSTR-1 and GSTR-3B. It
should be filed by all restaurants, except those registered under the
composition scheme.
The due dates and frequency of
filing returns vary based on the turnover and state-specific requirements.
Failure to file returns or filing them inaccurately or late may attract
penalties and interest.
Restaurants that are not under
the composition scheme can claim ITC on the GST paid for goods and services
used in their business operations. This includes items such as raw materials,
kitchen equipment, rent, and other input expenses. However, there are certain
conditions and restrictions for claiming ITC. For example, the supplier must
have filed their GST returns and paid the taxes to be eligible for ITC.
Restaurants must reconcile their purchases and expenses with the details
provided by their suppliers in their GST returns to ensure accurate ITC claims.
6. Compliance with E-invoicing and E-way Bill
Depending
on the turnover and nature of the supply, restaurants may need to comply with
e-invoicing and generate e-way bills for the transportation of goods.
E-invoicing involves reporting invoices to a centralized portal, which then
generates a unique invoice reference number (IRN) along with a QR code. E-way
bills are electronic documents required for the movement of goods valued above
a specified threshold. Compliance with these requirements aims to ensure the
seamless integration of tax data and prevent tax evasion.
To ensure proper GST compliance, it is
recommended that restaurant owners stay updated with the latest GST regulations
and consult a qualified tax professional or chartered accountant. They can
provide guidance on the specific requirements applicable to the restaurant's
business and help ensure accurate compliance with GST laws.
Created & Posted by Pooja
Income Tax Expert at TAXAJ
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