Do you have to pay GST tax along with the bills even if you are eating out in a small restaurant? The recent tax inspection reports state that some dining establishments are engaged in such Fraudulent activities that may cheat the customers and make them pay more by applying the tax amount on both CGST and SGST even if they are not registered with the scheme.
What are the rules?
The law states that small restaurants with a turnover under One and a half crores are not obliged to pay the GST tax. Such people are only bound to pay 5%of their turnover and there is also a rule not to take this 5% from the customers. This is called composition. This scheme was introduced to help small restaurants as well as small-scale businesses.
Prabhakar K S, founder and CEO, of Shree Tax Chambers, replied- “The restaurants in question fall under the GST composition scheme, an alternative tax regime designed to reduce the compliance burden on small taxpayers. “These restaurants have to pay 5% GST from their own kitty and not collect it from customers”.
CBIC (Central Board of Indirect Taxes and Customs) cleared that any dining establishment registered as a composition taxpayer cannot issue taxable invoices and also cannot legally collect GST from customers and can neither claim ITC on his purchase.
It is mandatory for the restaurants in the Composition scheme, that they must mention their status on board on their restaurant premises and their Bill also, despite of all the regulation declarations many of the restaurants are observed not following these practices.
Tax authorities quoted – “as per the GST law, a person registered as a composition taxpayer cannot issue taxable invoice and can neither collect GST from his customers nor can claim the input tax credit on the customer bills”.
How to verify?
There is a way to identify if the restaurant is registered under the GST composition scheme. It is an easy job for the hotels to create a fake GST number to mention on the top of the bill (which is a fifteen-digit code), to charge the extra. To verify this GST taxation on Bills, login to the GST website fill in the given GST number on the Bill and check directly.
As per GST law, a person registered as composition taxpayer cannot issue taxable invoice and can neither collect GST from his customers nor can claim input tax credit on his purchases. (1/2) https://t.co/UDp2OWQmNn
— CBIC (@cbic_india) February 20, 2023
If the GST number calls out as invalid you can file a complaint against the restaurant immediately on the portal. If the number is valid you have to check two things whether the hotel is under the Regular scheme then you can pay the GST, but if the restaurant is registered under the Composition scheme then you can legally file a complaint.
CBIC authorities also posted a tweet sharing the link to their websites where the users can ascertain whether a business is within the composition levy or not.
From now one is a responsible citizen and do check once if you are not getting scammed, to see whether the GST number is included in the Bill with mentioned the registration scheme.
Photo by Matheus Bertelli