Taxgen Team
- Apr 24, 2020
- 3 min read

GST And Restaurants : Practical Approach

Updated: Oct 11, 2020

(A) Rates on Food And Hospitality Industry

§GST Council in the 37th meeting held on 20th September, 2019 at Goa inter-alia, decided to lower GST rates on hotel tariff, outdoor catering and other miscellaneous items. To give effect to its decision they have issued Notification No. 20/2019-Central Tax (Rate) dated 30th September, 2019

(B)Meaning of Specified Premises

§Specified premises means the premises providing the hotel accomodation services having declared tariff (i.e. published tariff without any discount) of any unit of accomodation above Rs. 7,500.

§Rate of GST on outdoor catering services other than in premises having daily tariff of unit of accommodation of Rs 7501 reduced from present 18% with ITC to 5% without ITC. The rate shall be mandatory for all kinds of catering.

§Catering in premises with daily tariff of unit of accommodation is Rs 7501 and above shall remain at 18% with ITC.

(C) Restaurant Industry in Today’s Scenario Viz Zomato & Swiggyie E-Commerce Operators

These are also known as food aggregators , since its an online platform where in food vendors are listed and delivery services are provided by E-Commerce operators.

Question:

Whether GST Registration is Mandatory if a food business operator wants to list his business on Zomato or Swiggy?

Answer:

Yes , as per Section 24 of CGST Act 2017 , where a person is supplying goods or services through E-Commcerce platform he is liable to get registered without the exemption of threshold of

20 Lakhs in Case of Supply of Services.
40 Lakhs in case of Supply of Goods.

However Certain Exemption to Service Provider to :

(A) Category of Persons

Persons who supply goods and/or services, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52

(B) Exemption Granted

Supplier providing services through an ecommerce operator if the aggregate turnover does not exceed ` 20 Lakhs (Notification No. 65/2017–Central Tax, dated 15.11.2017 amended vide Notification No. 6/2019-Central Tax, dated 29-Jan-2019, w.e.f. 1-Feb-2019)

These are also known as food aggregators , since its an online platform where in food vendors are listed and delivery services are provided by E-Commerce operators.

(1) Modus Operandi

§A unique login-id is created on these platforms of the food business operator where in they are asked for a valid Proof of business and FSSAI License before registration which is another area of practice for chartered accountants.

(2) Accounting Perspective

§Statement of Affairs are generated on the e-commerce platform , which is a detailed statement comprising of S.no. ,Order ID Order date Res. name ,Res. ID ,Mode of payment ,Order status ,Gross revenue (INR) ,Customer discount amount (INR) ,Commissionable amount ,(INR) ,Commission % ,Commission value (INR) ,Convenience fee (INR) , Taxes on Zomato fees(INR) ,Tax collected at source (INR), Amount Net receivable (INR) Settlement status Settlement date Bank UTR etc

On the basis of above accounting is to be performed and receivables and payables are to be managed.

(D) TCS Under GST In Restaurant Business

Section 52 of CGST Act 2017 lays down the legal provision and rules there under for the execution of TCS Compliance under GST.

Question :Who is liable to collect TCS under GST?

Answer :

Certain operators who own, operate and manage e-commerce platforms ( Zomato , Swiggy ) are liable to collect TCS.
TCS applies only if the operators collect the consideration from the customers on behalf of vendors or suppliers.
In other words, when the e-commerce operators pay the consideration collected to the vendors they have to deduct an amount as TCS and pay the net amount.

Question : On what amount and what rate the Ecommerce operator will deduct TCS?

Answer :

Rate : 1% of Value of Supply ( 0.5% CGST , 0.5% SGST ) in case of Intra State Supply ( Most Cases ) , 1% IGST in case of Inter State Supply.
Amount : The said amount will be calculated on the net value of the goods/ services supplied through the portal of the operator. ( Net of Sales Return)

Question : Whether credit of TCS Will be provided to Food Business Operator?

Answer :

The tax collected by the operator shall be credited to the cash ledger of the supplier who has supplied the goods/services through the Operator.
The supplier can claim credit of tax collected and reflected in the return by the Operator in his [supplier’s] electronic cash ledger.