GST on Restaurant Services

There has been a mixed reaction among the e-com operators after the government’s decision to notify ‘Restaurant Services’ under section 9(5) of the CGST Act of 2017

5% slab of GST on restaurant services is now applicable from 1st January of 2022.

This decision was taken in the 45th meeting of the GST council called on 17th September 2021. This decision has impacted the way of billing the customers by the e-com operators supplying the restaurant services to the end-consumer.

From now on, the GST that applies on the supplies of restaurant services supplied via an e-com operator like Swiggy restaurant or Zomato shall be paid by the ecommerce operators.

 In this short article, we will be looking at the essential aspects of how this decision will impact the e-com industry specializing in the delivery of restaurant services to consumers.

5% GST on restaurant services – clarifies CBIC

GST Circular No 167/23/2021 clarifies that a 5% GST slab will be applicable on the restaurant services supplied via ECOs

This will come into effect from 1st January 2022.

This notification changes many things for the restaurants, like the e-invoicing under GST. Hence restaurants will be required to make specific amendments to their e-Invoicing software to ensure a smoother invoice generation for restaurant orders & orders received through ECOs like Swiggy & Zomato.

This decision has shifted the onus of GST collection from the restaurants to the food delivery apps that provide the services.

In the wake of this clarification, we will address some of the significant concerns that ECOs should be aware of:

1. Should the ECOs continue collecting TCS as per section 52 of the CGST Act of 2017?

  • AS per the notification dated 17th September 2021, ‘restaurant services’ have been notified under section 9(5) of the CGST Act 2017, hence, the ECO shall pay GST on restaurant services provided through them.
  • Therefore, ECOs shall NO longer be required to collect TCS.
  • ECOs are also not required to file their GSTR-8 w.r.t. the restaurant services provided through them.
  • Date of effect – 1st January 2022.
  • For other goods & services (other than those notified under section 9(5)), ECOs shall continue to pay Tax Collected at Source (TCS) as per section 52 of the CGST Act of 2017. The method of TCS collection shall stay the same as the present.

2. How should the ECOs file the 5% GST liability on restaurant services w.e.f 1st January  2022?

  • ECOs are expected to file their outward GST liability on all the restaurant services availed through them in cash.
  • E commerce operator can NOT utilize their GST Input Tax Credit for paying off their outward liability of 5% on restaurant services.
  • Food delivery apps should fall under the same compliance of the 5% GST bracket for all the restaurant services provided by them.

3. Will this decision add an extra tax load on the customer ordering the food?

  • This decision shall not add any extra tax load on the customers.
  • On the contrary, if the food delivery apps were to pass on the tax on the customers, then customers would have been paying more GST on food.
  • This amendment shall bring the unregistered restaurants under the GST slab through the e commerce operators providing their services.

4. What about the GST unregistered restaurants?

  • Suppose a small eatery supplies food to the consumer through a food delivery app. In that case, it is the responsibility of the food delivery platform to collect the GST from the consumer and pay it to the government.
  • This shall improve tax compliance and bring the unregistered food joints under the GST slab via the food delivery platforms.

To know more about GST Registration process, click on the link.

5. Can e commerce operator report the restaurant supplies as inward supplies in their GSTR-3B?

  • No. The e-commerce operator under GST can NOT record restaurant supplies as inward supplies to themselves.
  • Since the ECOs are not the end recipients of these services, they cannot show these supplies as inward services during their GSTR-3B filing.

6. Who issues an invoice w.r.t restaurant services supplied via food delivery apps?

  • E-commerce operator or food delivery apps will issue invoices w.r.t. the restaurant services supplied through ECOs.
  • It applies to the restaurant services notified under section 9 (5).

Earlier the food delivery apps or the E-com platforms were responsible for Tax collection at Source till now. GST was imposed on the food joints/restaurants.

But post this amendment, the food delivery platforms should accumulate the GST directly from the customer & furnish these details to the government.

In a nutshell

It's evident that the work of the e-com operators has been made a bit complicated w.r.t. the GST invoicing of different food items.

It’s always better to automate all your GST return filing activities to avoid such complications.

GSTHero’s GST return filing tool will automate your return filing with 100% accuracy and allow you to claim maximum Input Tax Credit under GST.

This amendment will ensure that all the GST registered businesses and the unregistered ones will be brought under the common umbrella. This will help in keeping up with the tax compliances.

Stay updated; stay ahead!

Until the next time….


Gaurav Yadav

About the author

Gaurav is an Engineer by training with a deep interest in Economics & Finance. He has been associated with the Fin-Tech industry for quite some time now. He writes for GSTHero for topics including GST Compliance, GST Structure, etc & aims to break down complicated technical jargon into simple terms for the taxpayers.

His expertise includes GST Laws, Corporate Finance & Macro-Economics.

Follow us:

Leave a Reply

Your email address will not be published. Required fields are marked

  1. how will restaurant show their sale in gst returns? It's not explained as they are getting money from swiggy or zomato so what is the procedure?

  2. The ECOs are paying GST at state level and therefore the activity against restaurant's GST is not getting recorded on the Government portal. We keep getting reminders about filing GST-r 1/3 every now and then and the notices. How to avoid all this ? Our GST is anyways getting paid by the ECOs. Please suggest and help.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}