Blog on Circular No. 167/23/2021-GST: GST on Restaurant Services Through E-Commerce Operators (ECOs)

2025-03-03 09:42:03 02March

02March

Blog on Circular No. 167/23/2021-GST: GST on Restaurant Services Through E-Commerce Operators (ECOs)

<h4><strong>Introduction</strong></h4><p>The <strong>Central Board of Indirect Taxes and Customs (CBIC)</strong> issued <strong>Circular No. 167/23/2021-GST</strong> on <strong>December 17, 2021</strong>, to clarify GST compliance for <strong>restaurant services provided through e-commerce operators (ECOs)</strong>. This follows the <strong>45th GST Council meeting</strong> held on <strong>September 17, 2021</strong>, which recommended that <strong>ECOs should collect and pay GST on restaurant services under Section 9(5) of the CGST Act, 2017</strong>. The new rule came into effect from <strong>January 1, 2022</strong>.</p><hr><h3><strong>Key Highlights of the Circular</strong></h3><h4><strong>1. GST Liability for Restaurant Services via ECOs</strong></h4><ul><li><strong>ECOs like Zomato, Swiggy, etc., are responsible for collecting and paying GST on restaurant services</strong>.</li><li><strong>Restaurants supplying through ECOs will not charge GST on their invoices</strong>; instead, the <strong>ECOs will charge and deposit GST</strong>.</li></ul><h4><strong>2. No TCS Collection on Restaurant Services</strong></h4><ul><li><strong>ECOs are no longer required to collect TCS (Tax Collected at Source) under Section 52 of the CGST Act for restaurant services</strong>.</li><li><strong>TCS will still apply to other goods and services sold through ECOs</strong>.</li></ul><h4><strong>3. No Separate GST Registration for ECOs</strong></h4><ul><li>If an <strong>ECO is already registered</strong>, there is <strong>no need for a separate GST registration</strong> for handling <strong>restaurant services under Section 9(5)</strong>.</li></ul><h4><strong>4. ECOs to Pay GST Even for Unregistered Restaurants</strong></h4><ul><li><strong>GST liability remains with ECOs</strong>, even if the <strong>restaurant supplying food is unregistered</strong>.</li></ul><h4><strong>5. Impact on Restaurant’s Aggregate Turnover</strong></h4><ul><li>The <strong>aggregate turnover of restaurants supplying via ECOs will include restaurant services made through ECOs</strong>.</li><li><strong>This turnover determines GST registration thresholds</strong> for restaurants.</li></ul><h4><strong>6. GST Reporting in GSTR-3B & GSTR-1</strong></h4><ul><li><strong>ECOs must report restaurant service supplies in GSTR-3B</strong> under outward taxable supplies.</li><li><strong>For GSTR-1, ECOs should report these under Table 7A(1) or Table 4A</strong>.</li><li><strong>Restaurants should report such supplies in Table 8 of GSTR-1 and Table 3.1(c) of GSTR-3B</strong>.</li></ul><h4><strong>7. Invoicing and Tax Compliance</strong></h4><ul><li><strong>Invoices for restaurant services must be issued by the ECO</strong>, not the restaurant.</li><li><strong>If an order includes both food (restaurant service) and other goods</strong>, a <strong>separate invoice for restaurant service must be raised</strong>.</li></ul><h4><strong>8. No Input Tax Credit (ITC) for ECOs on Restaurant Services</strong></h4><ul><li><strong>ECOs cannot use ITC to pay GST on restaurant services</strong>; they must pay <strong>GST in cash</strong>.</li><li><strong>ITC on other services remains unchanged for ECOs</strong>.<a href="https://cms.plasament.com/storage/nisha/circular-167-2021-gst.pdf">circular-167-2021-gst</a><br> </li></ul>