GST and its impact on YOU!


GST on restaurants 5% or 18% or both? There’s one clause about eating out you must know

Recently, Delhi-based India Habitat Center put up a notice clarifying that it was levying 18% GST on its restaurant services because it also provided room services above Rs 7,500.


Legal expert L Badri Narayanan of Lakshmikumaran & Sridharan Attorneys told FE Online that the GST Council made it clear that eating out tax rates cannot vary for in-house customers or outside customers. Only if a restaurant is not located in the same premise with lodging services above Rs 7,500, the GST rate would be 5%.


Restaurants located within the premises of 5-stars at least, were always charging 18% GST for guests or walk-in customers. How this applies to IHC or if they're taking advantage of it, I'm not sure, since if this is with regards to their eatery Eatopia, it is located within a different building than the lodging complex. IHC complex itself houses different establishments from lodging, to offices, to art galleries.

One thing I've noticed though is that room service ordered in 5-stars would attract a different rate of tax in the final bill, which was less than 18%, even in hotels under the 28% bracket. Hence I've started sticking to ordering in-room as I find it comfortable as well, unless I'm traveling with a group or its a working lunch.

What I did learn from this article in fact, is that hotels can now charge 18% or 28% based on the charged room tariff and not the rack rate. Helps the customer a lot, as most of the times the reservation rate is much less than the rack rate, but still hotels would have to charge 28% if their official rate was over Rs. 7500. Can anyone who has traveled recently confirm if this is being practiced or not? Else, I have an upcoming trip next week where I'll get to check this.