{"id":11983,"date":"2020-07-30T14:46:33","date_gmt":"2020-07-30T09:16:33","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=11983"},"modified":"2020-11-09T14:24:31","modified_gmt":"2020-11-09T08:54:31","slug":"applicability-of-gst-on-food-industry","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/applicability-of-gst-on-food-industry\/","title":{"rendered":"Applicability of GST on Food Industry: A Complete Guide"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In India, the Applicability of GST on Food Industry has always been the topic of Confusion and Dilemma. The reason behind this is that due to continuous change and modification in the tax regime, the Food Businesses are unable to implement all in it. <\/p>\n\n\n\n<p>In this blog, we will talk about the Different GST Rates\napplicable to the Food Sector in India.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a61b066a2c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a61b066a2c\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/applicability-of-gst-on-food-industry\/#Applicability_of_GST_on_Food_Industry\" title=\"Applicability of GST on Food Industry\">Applicability of GST on Food Industry<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/applicability-of-gst-on-food-industry\/#Overview_of_the_Food_Industry_in_India\" title=\"Overview of the Food Industry in India\">Overview of the Food Industry in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/applicability-of-gst-on-food-industry\/#GST_Rates_on_Eating_or_Food_Outlets\" title=\"GST Rates on Eating or Food Outlets \">GST Rates on Eating or Food Outlets <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/applicability-of-gst-on-food-industry\/#GST_Rates_for_Food_Products\" title=\"GST\nRates for Food Products\">GST\nRates for Food Products<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/applicability-of-gst-on-food-industry\/#Impact_of_Goods_and_Service_Tax_on_Food_Services\" title=\"Impact of Goods and Service Tax on Food Services\">Impact of Goods and Service Tax on Food Services<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/applicability-of-gst-on-food-industry\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Applicability_of_GST_on_Food_Industry\"><\/span>Applicability of GST on Food Industry<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In India, GST on Food Industry depends on several factors and is not restricted to the location and type of establishment. The tax slabs applicable in this sector are 5%, 12%, and 18%.<\/p>\n\n\n\n<p>However, it shall be noteworthy to state that the alcoholic beverages still fall under the ambit of state-level VAT (Value Added Tax). The restaurants, lounges, or any other food outlets engaged in serving alcohol will be charged differently from the outlets or restaurants that deal with food and non-alcoholic beverages.<\/p>\n\n\n\n<p>Further, the GST rates are not only applicable to the items and services offered by the outlets. It is also applicable to the food items and products that an ordinary man purchases. The range of the GST rates pertinent to food items begins from 0% (exempt) to 18% of GST. <\/p>\n\n\n\n<p>Lastly, we know that the VAT and\nService &nbsp; Tax regime have already been abolished\nor repealed after the enforcement of GST. However, the service charge applied\nby the Restaurants and Food Outlet is different from the GST applied by them.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Overview_of_the_Food_Industry_in_India\"><\/span>Overview of the Food Industry in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per a report named the <strong>\u2018Indian Food Services Market Forecast and Opportunities 2020\u2019<\/strong>, published by the <strong>TechSci Research<\/strong><a href=\"https:\/\/www.techsciresearch.com\/report\/india-food-services-market-forecast-and-opportunities-2020\/417.html\">[1]<\/a> , the food service industry in India is expected to rise at a CAGR of over 12% by the end of 2020.<\/p>\n\n\n\n<p>Further, the reasons behind the growth and boost in\nthis sector are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"768\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/07\/reasons-behind-the-growth-and-boost-in-Food-Sector-1024x768.png\" alt=\"gst on food products\" class=\"wp-image-11986\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/07\/reasons-behind-the-growth-and-boost-in-Food-Sector-1024x768.png 1024w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/07\/reasons-behind-the-growth-and-boost-in-Food-Sector-300x225.png 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/07\/reasons-behind-the-growth-and-boost-in-Food-Sector-768x576.png 768w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/07\/reasons-behind-the-growth-and-boost-in-Food-Sector.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n\n<ol><li>Increasing Disposable Income<\/li><li>Changing Lifestyle<\/li><li>Taste and Preferences of the Consumers<\/li><li>Youth Population in the Country<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GST_Rates_on_Eating_or_Food_Outlets\"><\/span>GST Rates on Eating or Food Outlets <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>\n  <strong>S.no<\/strong>\n  <\/td><td><strong>Description <\/strong>   <\/td><td><strong>GST Rates <\/strong>   <\/td><\/tr><tr><td>  1.  <\/td><td>GST on <strong><em>Outdoor Catering Services<\/em><\/strong>   <\/td><td>18%   <\/td><\/tr><tr><td> 2. &nbsp;   <\/td><td>GST on <strong><em>Food Services<\/em><\/strong>, including Food Delivery Services offered by a Restaurant or Food Joint positioned within a premise of a guest house, club, etc.   <\/td><td>18%   <\/td><\/tr><tr><td>3.   &nbsp;   <\/td><td>GST on <strong><em>restaurant services<\/em><\/strong> includes takeaway services and room services provided by the restaurants established inside a   hotel offering room tariffs <strong><em>more than Rs. 7500.<\/em><\/strong>   <\/td><td>18%   <\/td><\/tr><tr><td>4. &nbsp;   <\/td><td>GST on <em><strong>Food Services<\/strong><\/em> rendered by both Air Conditioned and Non-Air Conditioned Restaurants and Food Outlets   <\/td><td>\n  5%\n  <\/td><\/tr><tr><td> 5.&nbsp;   <\/td><td>GST on <strong><em>Restaurant Services<\/em><\/strong> includes takeaway services and room services offered by restaurants located within the building of a hotel charging room tariff <strong><em>below Rs. 7500<\/em><\/strong>.   <\/td><td>\n  5%\n  <\/td><\/tr><tr><td>6. &nbsp;   <\/td><td>GST on <strong><em>Meals, food, or food services<\/em><\/strong> offered by the government-owned CPSEs, i.e., IRCTC, or Indian Railways, or their licenses in stations, trains, or platforms.   <\/td><td>\n  5%\n  <\/td><\/tr><tr><td>7.   &nbsp;   <\/td><td>GST on <strong><em>Non-Alcoholic drinks<\/em><\/strong>, beverages, or food served at the mess, cafeteria, or canteen in college, office, school,   industrial unit, hostel, etc. on a contractual basis.   <\/td><td>\n  5%\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p><strong>Note<\/strong>:\nIt shall be relevant to note that GST rates are subject to periodic\nmodifications by government <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GST_Rates_for_Food_Products\"><\/span>GST\nRates for Food Products<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>\n  <strong>S.no<\/strong>\n  <\/td><td><strong>Description <\/strong>   <\/td><td><strong>GST Rates<\/strong>   <\/td><\/tr><tr><td>1. &nbsp;   <\/td><td>GST on <strong><em>chocolate, cocoa<\/em><\/strong>, and other chocolate and cocoa products   <\/td><td>18%   <\/td><\/tr><tr><td>2. &nbsp;   <\/td><td>GST on <strong><em>food preparations <\/em><\/strong>or items that are prepared using flour, malt extract, etc. enfolding cocoa below <strong><em>40% of the total weight<\/em><\/strong>.   <\/td><td>18%   <\/td><\/tr><tr><td>3. &nbsp;   <\/td><td>GST on <em><strong>food<\/strong><\/em> <strong><em>items<\/em><\/strong> such as powder or meal of dried legumes.   <\/td><td>\n  5%\n  <\/td><\/tr><tr><td>4. &nbsp;   <\/td><td>GST on <strong><em>turmeric <\/em><\/strong>(fresh turmeric is not included), <strong><em>curry leaves, bay leaves, thyme, rosemary ginger<\/em><\/strong> (fresh ginger not   included)   <\/td><td>\n  5%\n  <\/td><\/tr><tr><td>5.&nbsp;   <\/td><td>GST on <strong><em>bird\u2019s egg out of egg or shell yolks<\/em><\/strong> either boiled by steaming or properly cooked.   <\/td><td>   5%<\/td><\/tr><tr><td>6.   &nbsp;   <\/td><td>GST on <strong><em>bottle packed meat<\/em><\/strong> bearing the registered brand name or trademark   <\/td><td>\n  5%\n  <\/td><\/tr><tr><td>7.   &nbsp;   <\/td><td>GST on <em><strong>vegetables<\/strong><\/em> that are sun-dried and packed in a container bearing the registered trademark or logo of the brand   <\/td><td>\n  5%\n  <\/td><\/tr><tr><td>8.   &nbsp;   <\/td><td>GST on the <strong><em>fresh or chilled<\/em><\/strong> <strong><em>meat<\/em><\/strong> out of the container   <\/td><td>N\/A   <\/td><\/tr><tr><td>9.   &nbsp;   <\/td><td>GST on <em><strong>garden-fresh<\/strong><\/em> as well as <em><strong>chilled vegetables<\/strong><\/em>, including potatoes, onions, garlic, etc.   <\/td><td>N\/A   <\/td><\/tr><tr><td>10.   &nbsp;   <\/td><td>GST on <strong><em>fresh\/ cooked\/ preserved bird eggs<\/em><\/strong> in the shell.   <\/td><td>N\/A   <\/td><\/tr><tr><td>11.   &nbsp;   <\/td><td>GST on those <strong><em>vegetables<\/em><\/strong> which get preserved and sustained by <strong><em>using different methods<\/em><\/strong> that are <em><strong>unfit for direct Human Consumption<\/strong><\/em>.   <\/td><td>N\/A   121<\/td><\/tr><tr><td>12.   &nbsp;   <\/td><td>GST on <em><strong>pasteurised<\/strong><\/em> or <strong><em>unpasteurised<\/em><\/strong>  unsweetened milk, cream, etc   <\/td><td>N\/A   <\/td><\/tr><tr><td>13.   &nbsp;   <\/td><td>GST on <strong><em>fresh pears, dried or fresh coconut\/ fresh apples, fresh grapes<\/em><\/strong>, etc   <\/td><td>N\/A   <\/td><\/tr><tr><td>14.   &nbsp;   <\/td><td>GST on <strong><em>boiled\/ steamed\/ cooked vegetables<\/em><\/strong> packed inside a container    <\/td><td>N\/A   <\/td><\/tr><tr><td>15.   &nbsp;   <\/td><td>GST on <strong><em>dried leguminous shelled vegetables<\/em><\/strong> that are non-container packed despite if skinned\/ split or not   <\/td><td>N\/A   <\/td><\/tr><tr><td>16.   &nbsp;   <\/td><td>GST on <strong><em>fruits, nuts, vegetables,<\/em><\/strong> and <em><strong>various edible parts of the plants<\/strong><\/em> that got preserved or prepared by using <em><strong>vinegar or acetic acid   <\/strong><\/em><\/td><td>12%   <\/td><\/tr><tr><td>17.   &nbsp;   <\/td><td>GST on <strong><em>edible parts<\/em><\/strong> of the <strong><em>fruits, plants, nuts, and vegetables<\/em><\/strong> preserved or prepared with the help of <strong><em>sugar<\/em><\/strong>.   <\/td><td>12%   <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p><strong>Note<\/strong>:\nIt shall be relevant to note that GST rates are subject to periodic\nmodifications by government <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Impact_of_Goods_and_Service_Tax_on_Food_Services\"><\/span>Impact of Goods and Service Tax on Food Services<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Impact of Goods and Service Tax on Food Services\ncan be summarised as:<\/p>\n\n\n\n<ol><li>After the implementation of GST Act, the people who used to have breakfast, lunch, or dinner in the restaurants have noticed an ease in taxation procedure in terms of the bill as GST (Goods and Service Tax) came as a replacement for several taxes and cesses, such as KKC (Krishi Kalyan Cess), VAT (Value Added Tax), and Service Tax. Further, after the applicability of GST on Food Industry, customers have also witnessed the reduction in the tax rates on their restaurant bills. But the reduction in the cost of eating out for customers was noticed to be marginal at best. <\/li><li>The GST has not impacted the service charge, which is applied by the restaurants on the bill. Therefore, the customers are still paying Service Charge in addition to GST on food.<\/li><li>Earlier, after the implementation of Goods and Service Tax in India, it was expected that the ITC (Input Tax Credit) would improve the accessibility of the Working Capital Requirement for restaurants. However, in reality, the benefits of ITC available to the owners of the food outlets or restaurant got reduced due to continuous amendments. According to the prevailing GST rules and regulations, only those eateries or restaurants will get to avail of the benefit of ITC who are charging 18% GST. Further, the eateries or restaurants that are charging 5% GST will not be eligible to avail benefit of Input Tax Credit.<\/li><li>Further, the Goods and service tax exemption have also been provided in the case of fresh and frozen food products or items. <\/li><li>The Applicability of GST on Food Industry, services, or products will never cross the margin of 18%. That means no food item or product has been classified in the 28% GST Tax Slab, i.e., the highest tax bracket. Therefore, there is no report on the considerable increase or decrease in price after the applicability of GST on food industry and food items.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The applicability of GST on food industry, services, and food items or products has put an end to all the cascading effects of several indirect taxes. In this blog, we have discussed in detail about the GST rates applicable to different food items, together with the applicability of the GST rate on food services. <\/p>\n\n\n\n<p>Moreover, we have also talked about the impact of GST on customers and how they are enjoying the reduction in bill amount after its implementation.<\/p>\n\n\n\n<p>In case of any other confusion and difficulty, reach out to Swarit Advisors, our team of experts will help you in understanding the applicability of GST on Food Industry. Further, we can also assist you with <a href=\"https:\/\/swaritadvisors.com\/gst-registration\"><strong>GST Registration<\/strong><\/a>, GST Migration, and <strong><a href=\"https:\/\/swaritadvisors.com\/gst-return-filing\">GST Return Filing<\/a>,<\/strong> along with <strong><a href=\"https:\/\/swaritadvisors.com\/fssai-license\">FSSAI License<\/a><\/strong> and <strong><a href=\"https:\/\/swaritadvisors.com\/eating-house-license\">Eating House License<\/a><\/strong>, if you want to start a restaurant or eating joint in India.<\/p>\n\n\n\n<p class=\"text-left\"><b>Also, Read<\/b>:<mark style=\"background: #fffd03 !important\"><a href=\"https:\/\/swaritadvisors.com\/learning\/online-gst-calculator-calculate-gst-amount\/\">Online GST Calculator: Easiest Way to Calculate GST Amount<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In India, the Applicability of GST on Food Industry has always been the topic of Confusion and Dilemma. The reason behind this is that due to continuous change and modification in the tax regime, the Food Businesses are unable to implement all in it. In this blog, we will talk about the Different GST Rates [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":11985,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3,1],"tags":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/11983"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=11983"}],"version-history":[{"count":13,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/11983\/revisions"}],"predecessor-version":[{"id":15872,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/11983\/revisions\/15872"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/11985"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=11983"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=11983"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=11983"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}