In case of restaurant services, if they opt for 5% rate of GST for outward supplies by virtue ofNotification No. 20/2019-Central Tax (Rate). They are not eligible for availment of ITC as per the notification. But however, if inadvertenly they have availed an ITC say for 2 months and subsequently found out the same and reversed the ITC along with interest. Can they still continue in 5% rate of tax or because they have availed inadvertenly ITC for 2 months and subseqently reversed the same, the benefit of 5% does not applicable to them and subsequently apply 18% on outward supply.
Restaurants Can Maintain 5% GST Rate After Reversing ITC with Interest, No Need to Switch to 18% Rate. A discussion on a forum addressed a query regarding the Goods and Services Tax (GST) for restaurant services. The issue involved whether a restaurant that opted for a 5% GST rate, as per Notification No. 20/2019-Central Tax (Rate), could continue with this rate after inadvertently availing and later reversing Input Tax Credit (ITC) with interest. Respondents clarified that reversing ITC with interest is considered as 'credit not taken,' allowing the restaurant to maintain the 5% GST rate. They emphasized that taking credit temporarily does not necessitate switching to an 18% GST rate. (AI Summary)
Goods and Services Tax - GST
TaxTMI 
TaxTMI 
