What is GST (Goods and Service Tax)? And GST Rate on Food Items

Introduction 

In this blog information on GST for food, taxes on food in India, GST on grocery items, GST on restaurant food, and other relatable information on GST rate on food items is included. Food services in India are subject to a 12%, 5%, and 18% GST (Goods and Services Tax), depending on a number of factors, including the type of establishment and location of the restaurant/food service provider.

The introduction of GST on food services replaced the previous VAT (Value Added Tax) and service tax regimes; nonetheless, restaurants’ service charges are separate from GST. Because alcoholic beverages are still subject to VAT, a state-level tax, restaurants that offer both food and alcoholic beverages will charge separate taxes, with GST applied to food and non-alcoholic beverages and VAT applied to alcoholic beverages provided.

What is GST (Goods and Service Tax)?

The Goods and Services Tax (GST) is a tax imposed on goods and services. It is an indirect tax that has mostly superseded many other indirect taxes in India, such as VAT, Services Tax, and Excise Duty. The Goods and Service Tax Act was passed by Parliament on March 29, 2017, and into effect on July 1, 2017. In India, the Goods and Services Tax (GST) is a multi-stage, destination-based tax that is levied on every value addition. GST (Goods and Services Tax) is a single domestic indirect tax law that applies to the entire country.

Why GST (Goods and Service Tax) is Important?

• With the implementation of the GST, it has simplified the taxation process for the services and commodity businesses in a country.
• GST brings uniformity in the Taxation process, along with that it will be easy for the taxpayer to file an income tax return.
• It allows centralized registration, points towards positive growth of the country’s GDP (Gross Domestic Product)
• GST (Goods and Service Tax) brings regulation and accountability to unorganized sectors such as the textile industry.

GST Rate on Food items in India

• Containerized veggies (steamed, uncooked, or boiled) have no GST.
• Vegetables preserved with brine or other methods that are unfit for immediate human consumption are exempt from GST.
• Meat packed in a container with a registered trademark/brand name is subject to a 5% GST.
• 5% GST on non-in-shell avian eggs and egg yolks boiled or steam-cooked.
• GST is 5% on ginger (excluding fresh ginger), turmeric (except fresh turmeric), thyme, curry leaves, bay leaves, and other herbs and spices.
• 5% GST on dried leguminous vegetables (skinned/split or not) packed in containers with a registered brand name (skinned/split or not)
• 12% GST on sugar-preserved vegetables, fruits, nuts, and edible plant parts
• Foods such as meal/powder of dried leguminous vegetables are subject to a 5% GST.
• 12% GST on the vinegar/acetic acid, preserved/prepared vegetables, fruits, nuts, and edible plant components.
• 18% GST on food preparations containing less than 40% cocoa by weight, such as those made with flour, malt extract, and so on.

GST impact on food products in India

GST on food is merely a bill simplification; it has replaced other taxes and cess such as VAT, Krishi Kalyan Cess, Service, and other taxes. Customers will see a fall in the effective tax on restaurant bills with the implementation of GST on food. However, the reduction in the expense of eating out for consumer was just minimal at best.

The service charge has remained unchanged, as it is still payable by the client additionally the GST on food in restaurants. The availability of  ITC (Input Tax Credit) with the implementation of GST was projected to boost working capital availability for restaurant businesses.

ITC (Input Tax Credit) benefits are only available to businesses charging 18% GST on food services, according to GST Laws, while restaurants or eateries charging merely 5% GST on food services do not obtain ITC benefits. Currently, the GST on food and food services does not exceed 18%, and no food goods are included in the highest tax category of 28%. As a result, no significant price increases or cuts in food goods have been reported since the implementation of GST (Goods and Service Tax).

Conclusion

In terms of GST on food goods like as vegetables, fruits, meat, and so on, mostly fresh and frozen products are subject to nil GST, i.e. GST exemption. Other GST rates apply solely to food items contained in containers with a brand name. Currently, the GST on food items or food services does not exceed 18%, and no food items are included in the highest tax category of 28%. As a result, no significant price increases or cuts in food goods have been reported since the implementation of GST (Goods and Service Tax).