The Goods and Services Tax (GST), implemented in July 2017, brought about significant changes in the Indian taxation system. However, the application of GST to various services, including restaurant bills, can be confusing. It is crucial for consumers to be aware of when GST is mandatory and when it is not, especially considering the existence of the GST Composition Scheme for certain establishments.
Under the comprehensive, multi-stage, destination-based GST Law, almost every transaction, from grocery shopping to dining out, is subject to GST. However, not all restaurants have the right to charge GST, particularly those taking advantage of the government’s GST Composition Scheme. This lack of awareness sometimes leads to customers unknowingly paying GST when it is not applicable.
The GST Composition Scheme is designed to ease the tax burden on small traders. Restaurants or businesses under this scheme cannot charge GST from customers on their bills. Instead, they pay the tax from their own funds. Entrepreneurs eligible for the composition scheme, with an annual turnover below Rs 1.50 crore and no interstate transactions, can apply for it. They are then exempt from issuing tax invoices and filing monthly returns. For goods transactions, a 1% tax applies, while services and non-alcohol restaurant businesses are subject to a 6% and 5% tax, respectively.
Customers can identify whether a restaurant has availed the GST Composition Scheme benefits by checking their bill. If the bill mentions “composition taxable person, not eligible to collect tax on supplies,” it indicates that the restaurant cannot add GST to the bill. In such cases, customers have the right to refuse to pay any additional GST charge on the food bill.
To confirm a restaurant’s GST status, follow these steps:
- Visit the GST portal.
- Click on Search Taxpayer.
- Select Search Composition Taxpayer.
- Enter the GST number from the restaurant bill.
By following these steps, consumers can determine whether the restaurant is a regular GST payer or a composition payer. If the restaurant falls under the composition scheme, customers are not obligated to pay any additional GST charge indicated on the bill.
In case a restaurant has incorrectly collected GST on the bill, customers can submit an online complaint through the provided link.
