🇮🇳India

Food & Beverage (F&B) GST Rate Confusion: 5% vs. 18% on Room-Bundled Services

2 verified sources

Definition

F&B services on non-specified premises (most hotels) are taxed at 5% with no-ITC. When bundled with rooms, hotels must segregate revenue by component: room (5% or 18%) and F&B (5%). Failures to segregate correctly trigger: (1) GSTR-2B reconciliation mismatches (supplier claims 18%, hotel receives 5%), (2) GST audit adjustment (demand for undercollected GST), (3) customer confusion and payment disputes.

Key Findings

  • Financial Impact: ₹30,000–₹200,000+ annually per hotel (assumes F&B revenue 15–25% of room revenue, rate misclassification on 10–20% of F&B invoices, audit adjustments at 5–18% GST).
  • Frequency: Per F&B invoice (daily for full-service hotels).
  • Root Cause: Manual invoice creation without automated room/F&B segregation; POS system not linked to billing; lack of tariff classification rules in invoicing software.

Why This Matters

The Pitch: Indian hotels waste ₹30,000–₹200,000+ annually on F&B GST misclassification and audit rework. Automated itemization of room + F&B services ensures correct rate application and eliminates billing disputes.

Affected Stakeholders

F&B Manager, Billing/Invoicing Specialist, GST Compliance Officer

Deep Analysis (Premium)

Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

GST ITC Reversal और Manual Compliance Burden

₹5,000–₹50,000 per hotel annually in audit adjustments, interest (18% p.a.), and penalties; multiplied across property portfolio.

GST Non-Compliance Penalties और Late Filing Fines

₹10,000–₹100,000+ per hotel annually (combination of filing delays, interest, and fraud penalties); TCS default: 10% of ₹7,00,000+ = ₹70,000+ penalty.

Underbilling और Tariff Reversal: Declared vs. Actual Room Rate Mismatches

₹50,000–₹500,000+ annually per multi-property chain (assumes 50–200 rooms, 60% occupancy, 10–15% discount frequency, 5–18% GST rate gap).

Manual GST Compliance Work: Unscalable Labor and Audit Rework

₹2,00,000–₹10,00,000+ annually per hotel (estimated: 30 hrs/quarter × 4 quarters × ₹500–₹1,500/hr accounting labor; multiplied by rework cycles).

GST Registration Exemption Loss और Threshold-Based Liability

₹50,000–₹300,000+ per hotel (varies by threshold-crossing amount and delay; interest accrues at 18% p.a.).

GST इनवॉइस गलतियों पर दंड

₹10,000-1 lakh per non-compliant invoice + 18% interest

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