There has been a change in the GST compliance for restaurants, according to Goversments recent update.
The Government has issued a direction under Section 9(5) of the CGST Act 2017 that:
Restaurant taxes on restaurant services will be paid by multi restaurant delivery software provider (“ECO”) at a rate of 5%; and
Taxes on non-restaurant services such as selling bakery items, candies, and so on are solely the responsibility of the restaurant.
The ECO will now be responsible for all compliance for a restaurant’s services, including tax invoices, tax payments, GST, and so on.
This amendment excludes restaurants associated with hotels with a rack cost of more than Rs. 7,500 and restaurants/items categorized as bakery, sweet, ice cream, and so forth. The exclusions will continue to be taxed in the same way they are now, and the ECO will not be forced to comply.
The above changes are expected to take effect on January 1, 2022.
Ubereats clone intends to divide eateries into three categories in the future:
Restaurants that offer a full range of dining options
Non-restaurants that sell single-category items such as baked goods, candies, ice cream, and so on
A hybrid is a combination of the two.
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Ubereats clone will take care of the taxes for the following three categories:
Restaurant category: Following the new implementation, all present 0 percent GST food items will be priced at 5% GST. This will result in no change in revenue for a partner, but because the overall price of the items to customers will increase, sales may suffer.
For example, if they sell an item for Rs 100 (with 0% GST), the price to the end user at Ubereats clone will increase after December 31, 21.
Another change is that such restaurants will no longer be required to register GST, lowering their operational costs.
Non-Restaurants: All restaurants without a valid GST will be blocked from using the Ubereats clone platform.
Hybrid Category: They must file a partial GST return for items that are not subject to the 5% GST. This makes the GST reporting process more difficult for such restaurants.
Doordash clone will reject all items in the menu update that do not have a GST value after January 1st, 2022.
It is recommended that you set up necessary taxes by December 31, 2022. Please configure backward tax if your item/menu pricing includes taxes. Please configure forward tax if you charge a price plus tax.