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The goods and services tax is a comprehensive indirect tax imposed on the supply of goods and services in India. Its implementation aimed to streamline the complex web of indirect taxes and create a unified market across the country. One of the sectors significantly impacted by GST rules and rates applicable to food items is crucial for businesses operating in this domain and consumers alike. This blog post aims to provide a comprehensive overview of the GST regulations and rates applicable to the food and food service industry.

GST rates on food items

The GST rates on food items vary depending on the nature of the food item and whether it is categorised as an essential or non-essential food item. Here are the key GST rates applicable to food items:

• Essential food items (0% GST): Unprocessed and unbranded food items, such as fresh fruits, vegetables, grains, and pulses, are free from GST. Furthermore, milk, eggs, curd, and other dairy products are also free from GST.

• Non-essential food items (0% GST): Processed and branded food goods, such as packaged snacks, cookies, and drinks, have a 5% GST. Simply put, frozen or preserved items such as frozen vegetables and meat are subject to 5% GST.

• Restaurants and bars (5% GST): Restaurants and bars, including those within hotels, are subject to a GST rate of 5% for the supply of food and non-alchoholic beverages.

GST rates for restaurants and bars

In addition to the GST rates, restaurants and bars must stick to specific rules and regulations under the GST regime. Some of the key points that need to be considered are:

• Firstly, restaurants are subject to either the 5% GST rate, which does not allow for input tax credit claims, or the 18% GST rate, which permits ITC claims. This pricing is determined by the location of the restaurant. Secondly, the GST rate for the supply of alcoholic beverages varies depending on the state’s specific regulations.
• Smaller restaurants and bars with an annual turnover below a specified threshold can opt for the composition scheme, which allows them to pay a flat GST rate without the benefit of ITC.
• Restaurants and bars may be required to generate e-way bills for the interstate movement of goods, depending on the consignment value and distance traveled. E-way bills ensure proper tracking and monitoring of goods movements and help prevent tax evasion.

How can a GST consultant help you?

CA plays a vital role in helping businesses in the food industry, including restaurants and bars. Here is how our pro GST consultants in Kolkata can help with GST compliance for food and restaurant bars:

GST registration
GST rate determination
Input tax credit
Composition scheme evaluation
• GST audit
• Advisory services

The experts can provide peace of mind and enable businesses to focus on their core operations while maintaining a strong compliance framework. Therefore, whenever in doubt, do not hesitate to ask the professionals to avoid risks.

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