As a leading provider of tax and accounting services, CA ADDA has closely monitored the impact of the Goods and Services Tax (GST) on the restaurant industry in India, including the Delhi market. In this blog, we delve into the key aspects of GST compliance for restaurants operating in Delhi in 2024.

GST Rates for Restaurants in Delhi

The GST rates applicable to restaurants in Delhi are as follows:

• Non-air-conditioned restaurants: 5% GST without input tax credit (ITC)
• Air-conditioned restaurants: 18% GST with ITC
• Restaurants within hotels with room tariff above ?7,500 per day: 18% GST with ITC

The lower 5% GST rate for non-air-conditioned restaurants has helped in reducing the overall tax burden for smaller establishments. However, the lack of ITC has limited their ability to offset the GST paid on inputs.

Composition Scheme for Small Restaurants

Restaurants in Delhi with an annual turnover of up to ?1.5 crore can opt for the GST Composition Scheme. Under this scheme, the restaurant pays a fixed 5% GST rate but cannot claim ITC. This simplified compliance mechanism has benefited small and medium-sized restaurants in the city.

Compliance Requirements

Restaurants in Delhi must comply with the following GST-related requirements:

• Registration: Obtain a valid GST registration number before commencing operations.
• Return Filing: File monthly GSTR-3B returns and quarterly GSTR-1 returns on time.
• Input Tax Credit: Maintain proper invoices and records to claim ITC on eligible inputs and services.
• E-invoicing: Restaurants with an annual turnover exceeding ?10 crore must generate e-invoices for all B2B transactions.
• Audit and Reconciliation: Conduct regular audits and reconcile GST returns with the books of accounts to ensure accuracy.

Failure to comply with these requirements can result in penalties, interest, and other legal consequences.

Impact on the Restaurant Industry

The implementation of GST has had a mixed impact on the restaurant industry in Delhi. While the streamlined tax structure and availability of ITC for larger establishments have improved their profitability, the increased compliance burden and the lack of ITC for smaller restaurants have posed challenges.

To navigate the GST landscape effectively, restaurant owners in Delhi must stay updated with the latest developments, seek professional guidance, and implement robust accounting and compliance practices.

CA ADDA remains committed to providing comprehensive support and guidance to our clients in the restaurant industry to ensure smooth GST compliance and maximize tax benefits.