Publish Date : 30/06/2017
Article By : CA Suyash Dubey & Rakesh Dawani

GST being the biggest indirect tax regime is going to hit the economy on 1st of July 2017. GST has brought abizarre and has coined a chaotic rubble nationwide. Soon to be implemented GST stirs a big question as of how this indirect tax will affect the pockets of the common man.Indian food industry is no exception to its impact.It is indeed interesting to see the exact impact on pocket of diverse Indian foodie’s vis-à-vis restaurant & food industry being one of the largest growing industries of the economy with highest CAGR.To sweep away the confusion from one large expanse, the FOOD INDUSTRY, we present you an evaluated analysis of how GST will affect the Cafe, Restaurant & Hotel bills and what will be end result faced by the foodies.

A Pre-GST bill comprises of food cost, VAT on food, VAT on beverages,"non-mandate service charge, CESS, service tax" and luxury tax ( only on 5star and 7star hotels)

Wherein, a Post GST bill will just include food cost along with the respective GST percent & mandatory service charge.

GST is a subsumed version of the present tax regime.


GST will be levied in 4 slabs ~ 5% , 12% , 18% & 28% and different sections of the food industry are affected in different manners, for instance, tax on AC restaurants will be 18% and that on NON-AC restaurants will be 12% . Moreover 18% tax will be levied on restaurants facilitating both AC & NON-AC sitting.


Putting light on the accommodation & luxury or corporate stays in Hotels & Lodges. GST has changeful percentages depending on the tariff rates. Hotel with room tariffs below Rs.1000 are exempted, 12% on hotel rooms with tariff in between Rs.1000-Rs.2499, 18% on hotel rooms with tariff in between Rs.2500-Rs.7499 and lastly a rate of 28% on rooms with tariff above Rs 7500.


Though GST will have an impact on your food bills but apparently the intensity of the impact of GST in food industry will depend on the class and choices of the consumer. Considering the quantum of expenses on total income of the consumer, impact doesn’t seem to be substantial.

Also after the complete supply chain being incorporatedin GST, the prices of raw materials will tend to drop resulting in lower food costincluding packaged food, materials used for meat& fish preparations, vegetable oil, breads, ice-cream, etc., which will indeed effect the final cost of the product for the supplier, resulting in reduced food cost.


  • GST on Small Restaurants (TO<75 Lakhs) – 5%
  • GST on NON-AC Restaurants – 12%
  • GST on AC Restaurants – 18%
  • GST on Hotel rooms with tariffs below Rs.1000 – Exempted – 0%
  • GST on Hotel rooms with tariffs in between Rs.1000-Rs.2499 – 12%
  • GST on Hotel rooms with tariffs in between Rs.2500-Rs.7499 -18%
  • GST on Hotel rooms with tariffs above Rs.7500 – 28%