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GST on restaurant services under composition scheme
GST composition scheme rules
The restrictions under composition scheme are as follows:
- Turnover should not exceed ₹5crores and ₹1crores under special category states.
- The individual should not be engaged in any other service other than restaurant (except some services like interest and exempt services).
- Restaurants cannot make inter- state outward supply of goods.
- Cannot supply any items exempt under GST such as alcohol.
- Cannot supply goods through an e-commerce operator.
- Restaurants cannot avail any ITC.
- Cannot collect taxes from the customer.
GST rates on restaurant services under composition scheme
The GST rate on restaurant services under composition scheme is 5% at a concessional rate on the turnover.
How to identify restaurants under composition scheme?
- Those restaurants opting for composition schemes must mention “composition taxable person, not eligible to collect tax on supplies” on top of the bill of supply.
- Those restaurants opting for composition schemes must also mention “composition taxable person” on every notice or signboard outside the place of business.
GST on restaurant services under normal scheme
Conditions under normal scheme
- Compliances under normal scheme are higher than composition scheme.
- Under normal scheme, these are required to file Monthly Returns in Form GSTR 1 and GSTR 3B.
- All registered persons having the same PAN have to opt the same scheme, others become ineligible to opt normal.
GST rates on restaurant services under regular scheme
| Types of restaurants | GST rate |
| Railways/IRCTC | 5% without ITC |
| Standalone restaurants | 5% without ITC |
| Standalone outdoor catering services | 5% without ITC |
| Restaurants within hotels (where room tariff is less than Rs 7500) | 5% without ITC |
| Normal/composite outdoor catering within hotels (where room tariff is less than Rs 7500) | 5% without ITC |
| Restaurants within hotels (where room tariff is less than Rs 7500) | 12% with ITC |
| Restaurants within hotels (where room tariff is more than or equal to Rs 7500) | 18% with ITC |
| Normal/composite outdoor catering within hotels (where room tariff is more than or equal to Rs 7500) | 18% with ITC |
| Restaurant serving alcohol | 18% with ITC |
ITC on restaurant services under regular scheme
Those restaurants opting for normal scheme are eligible to claim the input tax credit (ITC) on the input supply used in the course or furtherance of business except in some cases. The ITC can be used for paying the output liability of GST.
