GST on liquor in restaurants in India – Why VAT and GST are charged together in restaurant bill? – With example
by Paras Mehra 28.2K
1.0 Introduction
Every person who went to restaurant for food always analyzes the food bill before paying the same. However, after 1st July, 2017, one thing the consumers are finding irritating that both VAT and GST are charged on the same bill. People always question this levy because what they have understood is that GST has already subsumed all the existing indirect taxes including VAT.
To remove all the ambiguity around this topic, we have written this article so that you can understand as to why GST and VAT are still charged together.
2.0 VAT on alcohol is out of GST ambit
VAT on alcohol for human consumption is a state matter where central government has no right. Further, this levy has been kept out of the GST preview and may be soon brought into the GST ambit. However, currently alcohol is still covered under VAT and not under GST.
Therefore, if your bill contains any liquor portion, then you will see that VAT and GST shall be charged together. Let us understand by way of example:
Q. Mr. A order 3 beer, food and sweet in the order. He ate his dinner and asked for a bill. The cost of the beer, food and sweet is as follows:
- 3 Beers @ 200 each = Rs.600/-
- Food = Rs.1000
- Sweet = Rs.200 in
Service charge shall also be levied @10%. The restaurant has asked for your advice; kindly help them to raise the GST compliant invoice. Assume VAT @ 20% and GST @ 18%.
A. As per GST law, GST shall be charged on all the food items except liquor. This is because liquor is not covered under GST and still governed by VAT provisions.
Here are the calculations for GST compliant invoice:
- Total bill: 1800/- (including Rs.600 of beer)
- Add service charge @ 10% of Rs.180/-
- VAT on beer @ 20% = Rs.120/-
- GST on rest [(1800+180-600)*18%] = Rs.248/-.
Hence, you can see that VAT and GST shall be charged separately. Further, even if they are charged together, there is no double calculation in it.
3.0 Conclusion
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