GST FOR CAPITAL EXPENDITURE IN DELIVERY KITCHEN RESTAURANT

[Kratant Khandelwal]

Dear Sir,

I am launching a delivery kitchen model for a restaurant where I will be only supplying food through my own riders and third party deliveries like zomato etc. Now my query is that I am incurring expenditure for kitchen equipment and construction and various other expenditures and paying GST @ 18% on them, will I be eligible for getting a refund on the same from the government? as my tax bracket lies in 5% under GST, and tax paid is at @ 18% for construction kitchen equipment lighting consultancy etc.

[Yash Jain]

Dear Sir,

Congratulation on your new restaurant and we hope to come and dine ;)

Sir, as per Government notification No. 46/2017-Central Tax (Rate), dated 14th November 2017, standalone restaurants will charge only 5% GST but cannot enjoy any ITC on the inputs.

Hence though your model if a delivery model, but unfortunately it will be classified as restaurant service and eligibility for ITC Will be disallowed.

Following is the tabulated information which will give a brief summary of ITC Availability for various Restaurant Scenarios and as under,

Type of Restaurants	GST Rate
All restaurants	5% no ITC
Restaurants within hotels (room tariff <7,500- 5% without ITC	5% no ITC
Restaurants within hotels (room tariff >7,500 ) still 18% with ITC	18% with ITC
Outdoor catering	18% with ITC

Comments from esteemed members highly solicited

[DR.MARIAPPAN GOVINDARAJAN]

In my view you are not eligible for refund.

[Kratant Khandelwal]

Thank you so much for your valuable responses, it has helped me clear my doubt.

PS: Most welcome to come and dine although it is a delivery kitchen, if you are in Gurgaon please let me know I will send you some good food.

[Ganeshan Kalyani]

Sure Sir.

AI Summary

Input tax credit restriction for standalone restaurant supplies prevents recovery of GST paid on capital expenditure. Standalone and delivery-only restaurants are classified as restaurant services charged at the lower rate and are not eligible to claim input tax credit on inputs or capital goods; accordingly GST paid on kitchen equipment, construction and related expenditures cannot be recovered. Exceptions include restaurants within hotels with higher room tariffs and outdoor catering, which attract a higher rate and allow ITC.