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Can a stand alone restaurant opt for tax rate of 18% with ITC. Please cite the relevant rule

27 April 2025

Can a stand alone restaurant opt for tax rate of 18% with ITC. Please cite the relevant act rule or notification.

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Rama chary Rachakonda (Master in Accounts & high court Advocate email ID:ramachary64@gmail.com voice no:9989324294) (7436 Points)
Replied 27 April 2025

A standalone restaurant cannot opt for an 18% tax rate with Input Tax Credit (ITC). According to Notification No. 46/2017-Central Tax (Rate) dated November 14, 2017, standalone restaurants with a declared tariff of less than ₹7,500 per room are taxed at 2.5% CGST, subject to the condition that no ITC is availed on goods and services used for providing this service.¹ *GST Rates for Restaurants:* - *5% GST Rate*: Restaurants with no ITC benefit, applicable to standalone restaurants and those in hotels with a declared tariff below ₹7,500 per room. - *12% GST Rate Proposal*: There's a proposal to tax restaurants at 12% without ITC, but this hasn't been implemented yet. - *18% GST Rate*: Currently applicable to air-conditioned restaurants, but with ITC benefits.² *Key Points:* - *ITC Availability*: If a restaurant opts for the 5% GST rate, they cannot claim ITC on goods and services used. - *Composition Scheme*: Restaurants under the composition scheme are not eligible for ITC.³ To determine the best tax option for your restaurant, consider consulting a tax professional who can guide you through the GST laws and help you make an informed decision.

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Can a stand alone restaurant opt for tax rate of 18% with ITC. Please cite the relevant rule

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