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13 Jul 2017

Don't let restaurants fool you in the name of GST

Restaurant bill tax made easy for you

Some restaurants are having a field day by making customers pay extra. If someone questions them, they put the blame on GST.

Here's a foolproof guide to what you have to pay as tax and what you don't, in your restaurant bill under GST.

Bookmark it as a helpful guide and next time any restaurant tries to act smart, show them this.

In context

Restaurant bill tax made easy for you

Service Charge


Pre-GST, when you ate at a restaurant, as the bill, you had to pay for three prominent entries other than the price of the food items.

Those were the Service Charge, Service tax and Value Added Tax (VAT).

Let's be clear here, service charge is not a tax.

A restaurant is not legally bound by the government to levy it.


What exactly is service charge?

A service charge is levied by the establishment on its own discretion. Usually, this is around 10% and is mentioned on the menu.

If you don't want to pay it, you don't have to. If the restaurant forces you to pay for it, you can sue the establishment in consumer court.

It was and still is up to you to take the call.

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Local dhaba, open air cafes, small food joints, others


Local dhaba, open air cafes, small food joints, others

Now let's come to the tax part. There were usually two taxes i.e. service tax and Value Added Tax, which now have been replaced by GST.

Now, if you are in a Non-AC eatery that doesn't serve alcohol, you have to pay 12% as tax. It is made of Central GST (6%) and State GST (6%).

These also apply for local delivery restaurants.


None of them have 28% GST slab

If you are in an AC restaurant, whether it serves alcohol or not, you will have to pay an 18% tax. This is also applicable to Non-AC restaurants serving alcohol.

You will have to pay 12% tax if the snacks sold from restaurants are pre-packed and pre-cooked. There are no structures under which you have to pay 28% tax for it.

Liquor gets VAT not GST


Liquor gets VAT not GST

No GST is levied on liquor or liquor products. However, liquor will attract VAT, as imposed by your state. So, if you order alcoholic beverages and food, you pay GST on food and VAT on alcoholic beverages.

FYI, in restaurants that are under composition scheme and with an aggregate turnover of up to Rs. 75 lakh, you will have to pay 5% tax.

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