How to Calculate GST on Food Products?

GST, or the Goods and Services Tax, is a tax levied on any type of goods and services received and consumed within Indian territory. Three tiers of GST are levied on food items, i.e. 12%, 18%, and 5%. Depending on the place of the restaurant or the type of services provided by the restaurant, this tax percentage changes.

GST is a replacement of the very popular VAT or Value added tax which was levied on different food products and other items. Service tax is also replaced by GST. But alcoholic beverages still come under VAT, and for that, restaurants that sell alcoholic beverages can charge VAT to their customers.

If a customer consumes food and alcoholic beverages, he will get a bill where both VAT and GST are charged. Service charge is a different thing altogether. Some restaurants charge it separately in their bill, and some do not. It is the consumer’s choice whether he wants to pay the service charge or not!

Definition of GST

GST or the Goods and Services Tax is an indirect tax that is levied on every good and service consumed within the Indian territory. It is a multi-staged indirect tax, and it is levied on every step of value addition. When a product comes out in the market and from the producer, it reaches the end customer by roaming through different hands, everyone pays the same amount of GST. 

So, the end customer doesn’t need to pay a huge amount of GST after all these transactions. GST subsidized a lot of indirect taxes like VAT, Excise duty, service tax, etc. Before GST, consumers needed to pay a huge amount of taxes in the form of all of these taxes we mentioned here. GST came to market just to ensure that every consumer pays a certain amount of tax, and the tax stays the same at every level the goods pass through. 

From July 1, 2017, GST started getting added to Indian bills. This destination-based tax is the sole tax levied on all the domestic products and services enjoyed by Indians across the country. 

Importance of GST

There is a line of importance that lies ahead of this taxation system. The two most prominent constitutional amendments were done in favor of this taxation system. Amendment 101 and 122 of the Indian constitution are done to set up a GST council and to implement the taxation system throughout the country. 

  • There wasn’t any regulation and accountability available in the unorganized sector before GST. In unorganized sectors like the textile industry, leather industry, fishing industry, etc., taxation works smoothly post the introduction of GST. 
  • Uniformity of taxation is the biggest feature of GST. With this tax implementation, a taxpayer can easily file his income tax without hesitation, as this is a wholesome tax for all the goods and services he has consumed throughout the financial year. 
  • Before GST, it was tough to calculate the tax in the commodity and services field in India. With this implementation of the Goods and Services Tax, it got simplified. Now, the whole country pays one single tax. 
  • This indirect taxation has a centralized registration system. This will directly help the GDP or the Gross Domestic Product growth of the country. 

Gst Rates on Different Food Products in India

The food sector is very volatile yet one of the most important sectors of any country. Food items of different types exist out there, and that is the reason GST is implemented differently on every food item out there. Here is a list of all the implemented taxation on food items available in the Indian territory. 

Calculate the GST amount that needs to be paid before registering for GST using our GST calculator.

  • Any type of vegetable that is preserved with some preservatives or brine is strictly exempted from any GST. This type of vegetable is unfit for immediate human consumption. 
  • Veggies that come within containers in the form of uncooked, steamed, or boiled don’t attract any GST. 
  • 5% GST levied on ginger, turmeric (except the fresh ones), thyme leaves, bay leaves, curry leaves, and all other spices out there. 
  • Any branded, labelled, packed meat item that contains a registered trademark is subject to a 5% GST throughout the Indian territory. 
  • Dried leguminous vegetables (split or skinned or not) with registered trademark are subject to a 5% GST. These vegetables should be canned and not fresh at all. 
  • Eggs that are out of the shell and not avian eggs come under the 5% GST category. Canned eggs and yolks, both fried or steamed, come under this category and attract the same amount of GST.
  • Powder or meals available in cans prepared from leguminous dried vegetables are subject to 5% GST. 
  • Sugar-preserved plant items, nuts, veggies, and fruits are available in canned form. This attracts 12% GST straightaway! 
  • 12% GST is also levied on preserved or prepared food items, vegetables, nuts, fruits, and edible plant items. The preservatives used here can be vinegar or anything standard available in the food industry. 
  • All food preparations are done with less than 40% cocoa, flour, and malt extracts attract an 18% GST. 

These are the standard GST rates levied across the Indian subcontinent. Restaurants charge differently for their cooked food and the packaged food they serve to their guests. GST charged in restaurants is the same all across the country irrespective of the standard and stars associated with the restaurants. 

What Is the Impact of GST on Food Products in the Country?

In restaurants, it is a huge bill simplifier. People used to pay a line of taxes while visiting the restaurants, including VAT, service tax, Krishi Kalyan cess, and some other taxes too. But with the implementation of GST:, everyone needs to pay only a certain amount of tax. So, the restaurant bill seems lower with the implementation of this tax. 

Service charge is still out there, but it is the consumer’s choice whether he wants to pay this or not. If the restaurant’s services are not satisfactory enough, the consumer may ask the restaurant to provide him with a revised bill.  

Input Tax Credit or ITC is available for restaurants out there, and they can use it for the betterment of their restaurant and how they serve their guests. But restaurants that do not charge 18% GST on their bills cannot enjoy ITC. Most restaurants charge a mere 5% on their food bill. No food item falls under the highest slab of GST rate, which is 28%, and that is the reason there is not much change seen in the food and catering industry out there. 

Wrapping up

When it comes to any type of fresh vegetables, fruits, nuts, legumes, rice, wheat, meats, etc., no GST on Food Products. Even some frozen food items are also exempted from the Goods and Services Tax. Foods both cooked and uncooked available in cans and containers attract a certain amount of GST throughout the country. 

Mostly all the food items and restaurant charges fall within the 5% and 18% GST band. Nothing from the food and catering industry attracts 28% GST, which is the highest slab available in the country. As the change in taxation is not huge as of now, there is not any type of changes seen in the value of the food items available in India. Vakilsearch is one such company that can support you regarding any issues related to GST. 

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