4&5 Nature of Supply & Charge of GST (RCM, ECO incl. circular & amendments for Nov 22 | IDT Revision

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Important Links:

[shyamunadkat]

1. Supply 00:00 onwards
2. Charges of GST
- RCM

[yameenkhan]

Circular on Notified category of services u/s 9(5) - Restaurant : 50:25

[hemangisolanki]

Impact of introducing restaurant services in sec 9(5) on 4 types of Stakeholders-

(1) Suppliers of Restaurant services :

Advantage:

*For supply of restaurant services through ECO (other than those in specified premises having Room rent > 7500 p.u.p.d), such suppliers are relaxed from burden of collecting & paying GST and issuing Invoice to customers, As now it's shifted to ECO.


Disadvantage:

* Supply of restaurant services through ECO will also be included in its Aggregate Turnover of supplier of Restaurant services. In case it exceeds registration limit, registration is required.


(2) ECO :

Advantages :

*For supply of restaurant services of restaurant whose Room rent > 7500 p.u.p.d., even if it is provided through ECO, ECO is not required to collect & pay GST.

* For Restaurant services covered us 9(5) :-
(a) ECO is not required to collect TCS.
(b) ECO is not required to take separate registration, if already registered for its own supply.
(c) ECO is not liable in RCM, as it's not inward supply for ECO.
(d) ECO is not liable to reverse proportional ITC for such services.


disadvantages :

* For Restaurant services covered us 9(5) :-
(a) ECO has to collect & pay GST us 9(5) and issue invoice to customers. so this has increased compliance burden of ECO.
(b) Even for unregistered restaurants also, ECO has to collect & pay GST.
(c) ECO has to pay GST on such Restaurant services us 9(5), in CASH, it can't use ITC.

(3) Customer :

*No effect, bcz change is only that earlier GST was charged from them by Restaurants, now it is being charged by ECO. He is the ultimate consumer who consumes food, so he will have to bear GST in any case.

(4) Govt :

Advantage :
* Increase in GST revenue By charging GST from small/unregistered suppliers of restaurant services via ECO us 9(5).

[nandrivithmal]

does the chart book include all circulars and notifications applicable for nov 22? or those things should be studied seperately?

[sarthak]

Various Stakeholders of Resturant service covered under 9(5) are as follow.
1.) E commerce operator
2.) Customer
3.) Resturant (supplier)
4.) Government
Impect of 9(5) on all of the above are as follow
1. E commerce operator :-
A. Heigher Compliance cost due to filing of return as regular tax payer.
B. Eco will be liable for both charge Gst on Restaurant Goods and collect Tcs on non Resturant Goods.

2.) Customer :-
Customer will receive Foods on little bit heigher price from unregistered Resturant Supplier due to charging Gst on Food. Because before amendment supplier used to collect tax if registered otherwise Gst not charged but it is not like that anymore.Eco liable to pay tax to govt. It does not matter whether the supplier is registered or not.

3.) Resturant :-
A. Reduction in compliance cost on food which is order through ECO.
B. Loss of sales to unregistered supplier by food which became costly due to GST.

4.) Government:-
A. More Revenue due to GST will be collect from unregistered supplier sales also.
B. Saving in Administrative cost of keep eye on unregistered supplier which are tax evaded by collecting from customer but not pay to the govt.

[neeti]

On customer: This new rule will have no impact on customers as there is no extra and no new tax.This new rule has only led to change in the point where tax will be collected.

On restaurant:  This new rule will impact small restaurants, especially the ones having an annual turnover of less than Rs 20 lakh, as these restaurants were earlier not required to be registered under GST.
Also, after this new rule, there will be an additional compliance burden on most restaurants, as they will have to maintain two separate accounts — one for their regular business done and the second for the business done through Zomato or Swiggy.

On food delivery platforms : For food delivery platforms, this will add more burden of compliance towards collecting and depositing taxes on behalf of the restaurants and maintaining additional records.

[SiddhantPatil]

Impact on Stakeholders due covering Restaurant Services u/s 9(5)

1. Government: Increase in the revenue in the form of GST. Earlier government could not be able to collect GST on supplies by unregistered restaurant through ECO due to threshold benefit. Now due to the coverage of restaurant services u/s 9(5) government will be able to collect tax on supplies by all restaurant (Regd + Unregd) through ECO.

2. Restaurants Industry: Increase in the Documentation Procedures for Registered Restaurants. Registered Restaurant will be required to make & maintain separate records for invoices issued to dine-in customers and supplies made through ECO, as it will pay tax only of dine-in invoices and not on supplies through ECO. Further turnover of Unregistered Restaurant can be easily traced now so they cannot suppress their revenue to avoid the threshold for registration.

3. ECO: Increase in the Compliance of ECO. Due to this decision ECO has to collect & pay the tax on supplies of restaurant services through ECO. Further in case of supply of Restaurant services along with goods, ECO has to deduct TCS on goods part.

4. Customers: Increased cost to customers. Since Food Delivery apps like swiggy & zomato will be now charging GST on the supplies of restaurant services to customer, the burden of tax will be pass on to the customers, and customers would have to pay GST on food. Which was not the case in earlier scenario where unregistered restaurants were supplying the restaurant services through ECO.
For Example: Earlier if customer ordered food of Rs. 100 from small food joint through swiggy then customer was paying Rs. 100 only. But now, if the same food of Rs. 100 is ordered through ECO it will cost customer Rs. 105 (100 for food and 5 tax)

[ManishKumar-gqdy]

Sir I want to buy your fast track batch for November 2022 is there recorded lecturs for may 22 and is there major amendments in that

[Mahi_]

Section 9 (5) impact

The GST impact end-consumers as cost of ordering from smaller restaurants who were hitherto outside the GST ambit will go up if ordered through food aggregators.

The small restaurant owners who come under the GST threshold of generating an annual revenue of less than 40 lakhs are not required to pay GST in a normal scenario.

I don't think there is an impact on the consumer or at the restaurant end. I think the impact is gone to Swiggy and Zomato as they are collecting and paying for it. In a nutshell, the customer is still paying the five percent GST to the restaurants.

the food delivery apps start depositing tax on behalf of the restaurants, the eateries will also have to mandatorily register themselves under the GST as done by the e-commerce seller.

on restaurant service, ECO shall pay the entire GST liability in cash (No ITC could be utilised for payment of GST on restaurant service supplied through ECO.

Increase in Price for Customers.

Increase in Compliance for E – Commerce Operator and restaurants.

[vartikabaijal]

Impact of this section on E – Commerce Operator : Earlier Supplier was required to raise invoice in case restaurant service supplied through E – Commerce Operator. But now E – Commerce Operator is required to raise invoice on supplier for restaurant service supplied through E – Commerce Operator. This will increase the compliance burden for E – Commerce Operator.

Impact of this section on Restaurants : Restaurants has to bifurcate the restaurant services supplied through E – Commerce Operator and restaurant services supplied by them directly as they have to report separately in GSTR 1. This increases the compliance burden.

Eg Dominos supplies restaurant services through other E – Commerce Operators and well as its own app. For restaurant services supplied through other E – Commerce Operators, invoice has to be issued by E – Commerce Operator. For restaurant services supplied through its own app, Dominos has to issue invoice.

Impact of this section on customer: sec 9(5) would increase the price for customers in case the restaurant is unregistered or restaurants opted for Composition Levy. Even if the restaurant is registered restaurants may continue to supply without reducing the GST component which would increase the price for customers.

[Dipak_Pimpale]

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[deepakthakur]

Stakeholders of Restaurant service covered under Sec 9(5) & their impact:
1. Restaurants:


Govt. want to keep a check on small eatries like food vans, dhaba etc. by covering them u/s 9(5).
Since both Registered & unregistered Restaurant supply food through ECO but earlier Gst will be charged from Registered Supplier only but now GST will be charged from both suppliers but recovered through ECO.
Compliance will be increased in terms of books, invoicing & Return filing

Earlier they were receiving consideration net of TCS from ECO but now they will receive full consideration ex-commission.

2. ECO:

Compliance increased as now ECO is liable to collect GST from Customers & remit to Govt.

But need not to collect TCS from Restaurants now.

No need to take separate registration for showing sale of restaurant supply through them.

3. Customers:


Earlier if a person order food online from registered supplier via ECO then ha have to pay GST But if food is ordered fron unregd. Supplier, he need not to pay GST.

But now customer has to pay GST in Both cases.

It can be said that ordering food online is now proved to be a little costly due to gst which is going to be charged mandatorily.

4. Govt.

Increase in Revenue by covering Unregd. Restaurants in ambit of GST.