The Impact of the GST Bill on the Restaurant Industry

reduction in GST rate comes with a withdrawal of ITC

Taxes feel like a never ending maze of legal and mathematical terms and yet most people aren’t aware of what and how much tax they are paying while buying a product or a service. To overcome these confusions and the flurry of different taxes imposed on the general public, the Indian government has decided to adopt the policy of ‘one-nation-one tax’ and have come forward with the ‘Goods and Services Tax’ or GST Bill which will charge only a single tax on all consumers and save them from all the other direct or indirect taxes. The impact of the GST Bill on the Restaurant Industry is being expected to be positive, as it would get rid of the multiple taxation system. Read a detailed guide on how to get the GST registration done for your restaurant here.

How the GST Bill Affects the Restaurant Business

The list of taxes in India is a big fat one and not everyone knows what and how much they are paying for the goods and services they buy. Today, consumers pay a tax on the total amount of the goods and services, which include:

  • The cost of the raw material
  • Tax on raw material
  • The value added by the manufacturer
  • Tax paid by the manufacturer
  • Retailer’s margin of selling the good

Now with the implementation of the GST Bill the manufacturer will have to pay the GST on the value added by them and the consumer will have to pay the tax only on the retailer’s margin. It is hoped that the GST will help the consumer understand the tax implications while easing out the tax process for the retailers and manufacturers.

Impact of GST Bill on Restaurants as stated by Chirag Gupta 4700 BC

The GST Bill is a big boon to big traders of the organized sector as they will get a single market to buy raw materials from any part of the country as the tax will remain the same.

The GST is sure to help restaurants purchase raw materials at a cheaper rate. The final bill for the customers is also clutter-free and much easier to understand for the end-customers, as it only consists of the GST.

A four-tier GST rate structure has been decided where the taxes are levied at multiple levels, ranging from 5% to 28%. As per the new GST rates, five-star hotels and restaurants will be charged at 28%. Non-AC restaurants would be charged at 12%, while AC establishments would be charged at 18%.

The new GST rate structure spells good news for the small restaurants and would have a positive impact on the Cloud-kitchens and food delivery businesses as they would be charged significantly less than the AC food establishments and high-end restaurants.

Overall, the impact of the GST Bill on the restaurant industry is expected to be positive as it would bring in better processes and operations, by ensuring more transparency in business. The reduced tax levied on the small restaurants would also propel customers to spend more.

Read a detailed article about the GST Bill and how it would impact the restaurant business here.   

Impact of GST Bill on Restaurants as suggested by Umesh Kapoor


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Prachi is the Marketing Manager at Restroworks. In her current capacity, she establishes connections with key stakeholders in the F&B industry and serves as the host of The Restaurant Times talk show, "F&B Talks," tailored for the restaurant sector. With hands-on experience in international sales and marketing, Prachi has led initiatives in the LATAM and USA regions, contributing to the platform's global outreach.


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