Navigating the complexity of India's Goods and Services Tax (GST) can feel overwhelming, especially for restaurant owners and tax professionals. One of the trickiest parts?
Understanding the correct HSN/SAC codes and applicable GST rates for various food and beverage services. But don't worry—we’ve got you covered!
This blog is designed to be your go-to resource for decoding the mystery of restaurant GST rates.
HSN vs. SAC: What's the Difference?
Before we dive into the details, let's break down two important terms you’ll often hear: HSN and SAC.
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HSN (Harmonized System of Nomenclature): This is a global classification system for goods. It uses a 6-digit code to categorize items based on their nature and composition, making it a universal language for trade.
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SAC (Services Accounting Code): Under GST in India, SAC codes are used to classify services. It’s essentially an 8-digit extension of the HSN code, which allows for a more detailed classification of services.
Understanding SAC Codes for Restaurants
For restaurants, SAC codes fall under 9963, which covers services related to food and beverages. Here are the key categories:
- Serving food and beverages for consumption on or off-premises
- Takeaway and delivery services
- Catering services
- Supplying food and beverages for events
- Provision of banquet halls and event spaces
Let’s take a closer look at the key SAC codes specific to restaurant services:
| Code | Description for Service |
|---|---|
| 99631 | Services provided by Restaurants, Cafes and similar eating facilities including takeaway services, Room services and door delivery of food. |
GST Rates Applicable to Restaurants: What You Need to Know
Now, the million-rupee question: What GST rates apply to different restaurant services? The answer varies depending on a few factors:
- Type of Restaurant:
- Air-conditioned restaurants: 18% GST Non-air-conditioned restaurants: 5% GST
- Nature of the Service:
- Outdoor catering: 18% GST
- Takeaway and delivery: 5% GST
- Special Cases:
- Restaurant services inside 5-star hotels (with room tariffs over ₹7,500): 18% GST
- Supply of food to government or certain institutions (like defense, public hospitals): 5% GST
- Location Matters:
- Inter-state supply of food: 5% IGST (without Input Tax Credit)
Special GST Rates for Restaurants
The government has introduced specific incentives for certain scenarios in the restaurant sector:
- Supply of food to government departments, defense forces, public hospitals, and educational institutions is taxed at a concessional 5% GST.
- For inter-state supplies, the IGST rate is 5% but you cannot avail of Input Tax Credit (ITC).
Staying Compliant: Must-Know Tips for Restaurant Owners
Staying compliant with GST can feel like a moving target, especially as rates and codes get updated. Here are some practical tips to keep your restaurant GST-compliant:
- Keep detailed records of your invoices and bills. This helps you claim Input Tax Credit (ITC) and ensures you’re not paying more tax than necessary.
- Consult a tax advisor to help navigate complex GST rules and avoid pitfalls.
- Use GST-compliant software to automate your invoices, calculate taxes, and file returns.
On Your Plate: The Key Takeaways
At Suvit, we understand that navigating the complex GST landscape can be overwhelming for restaurant owners. Our goal is to provide you with clear, actionable information to simplify your tax compliance efforts.
Whether you're a small café owner or running a large restaurant chain, knowing the right GST rates and SAC codes can save you time, money, and a lot of headaches. Suvit is here to help you manage your restaurant's tax responsibilities with ease and accuracy.
Understanding the correct HSN/SAC codes and GST rates for restaurants is essential for compliance and smooth operations. While the landscape might seem complex, having the right knowledge simplifies things.
Whether you’re dealing with takeaways, catering, or banquet services, knowing which rates apply to which service can make all the difference. Keep this guide handy and ensure your restaurant stays on top of its GST game!
