Understanding the State GST Charges on Restaurant Food: Exploring Bikanervala and Haldirams’ Approach

India’s Goods and Services Tax (GST) system, implemented in 2017, has brought about significant changes in the country’s taxation landscape. One of the sectors that has been significantly impacted by this new tax regime is the restaurant industry. Many consumers have raised questions about the GST charges on restaurant food, particularly in popular chains like Bikanervala and Haldirams. This article aims to shed light on the state GST charges on restaurant food and explore the approach of Bikanervala and Haldirams in this regard.

Understanding GST on Restaurant Food

The GST system in India is a dual one, comprising of Central GST (CGST) and State GST (SGST). When a service is provided within a state, both CGST and SGST are levied. For restaurants, the current GST rate is 5%, but it’s important to note that this rate is applicable only for standalone restaurants. For restaurants located within hotels with room tariffs of Rs 7500 and above, the GST rate is 18%.

Bikanervala and Haldirams’ Approach to GST

Bikanervala and Haldirams, two of India’s most popular food chains, have been charging state GST on the food prepared in their restaurants. This is in line with the GST law, which mandates that GST should be charged on the final product or service, not on the individual ingredients used in the preparation. Even though these restaurants use ingredients from the local market, they are providing a service (preparation and serving of food) which is taxable under the GST regime.

Why is GST Charged on Restaurant Food?

One might wonder why GST is charged on restaurant food when the ingredients used are from the local market and might already have GST applied to them. This is because GST is a value-added tax. It is applied at each stage of the supply chain, with the final consumer bearing the tax. When a restaurant prepares and serves food, it is adding value to the raw ingredients, and hence, GST is applicable on the final product.

Conclusion

While the application of GST on restaurant food might seem confusing at first, it is in line with the principles of the GST system. Restaurants like Bikanervala and Haldirams are simply following the law by charging state GST on the food they prepare. As consumers, it is important to understand the basics of GST to better comprehend the breakdown of our restaurant bills.

References

• Central Board of Indirect Taxes and Customs. (n.d.). Goods and Services Tax. Retrieved from https://cbic-gst.gov.in/
• India Briefing. (2018). India’s GST Rates For Food and Beverage Industry. Retrieved from https://www.india-briefing.com/news/india-gst-rates-food-beverage-industry-17104.html/