Restaurant GST: dine in vs app orders
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Free first stepDo you need GST? Check the limitsCredit not in GSTR-2B? Stop losing input tax credit.
We reconcile purchases with GSTR-2B and IMS and chase the suppliers.
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Facts, Provisions and law, Analysis, Conclusion.
Composition Scheme: Rates, Eligibility, Filing, Exit
- Facts
- For small businesses below ₹1.5Cr turnover, pay GST at a flat lower rate on turnover instead of the standard 18/12/5% structure. No ITC, no B2B GST invoices, simplified compliance. Two returns a year instead of 24+ monthly filings. But once you cross ₹1.5Cr or make inter-state supply, you must exit.
- Provisions and law
- Sec 11 (old 10(1)); Sec 11 (old 10(2)); Sec 11 (old 10(5)); Rule 7; Sec 10(3)
- Analysis
- Who benefits most from composition scheme: Small retailers, kirana shops, small restaurants, local manufacturers, where most customers are B2C (end consumers). Since composition taxpayer cannot issue tax invoices, your B2B corporate clients cannot claim ITC, so if you primarily serve corporates, composition is not ideal. Tax payment under composition: No monthly tax computation on invoice-by-invoice basis. Just pay a fixed % of quarterly turnover. Pay via CMP-08 quarterly (by 18th of month after quarter). Annual return GSTR-4 by April 30. Much simpler than monthly GSTR-1 + GSTR-3B + quarterly GSTR-9. What composition taxpayer cannot do: Cannot collect GST from customer (tax comes from your own pocket on your turnover). Cannot issue a GST tax invoice, only "bill of supply" without GST. Cannot make inter-state sales. Cannot supply exempt goods without exiting.
- Conclusion
- Check eligibility: aggregate turnover in preceding FY ≤ ₹1.5Cr (₹75L for services)
- Confirm no inter-state supplies made or planned in the FY
- Confirm not selling on Amazon/Flipkart/Meesho (e-commerce aggregator = not eligible)
- Apply for composition: GST portal → Services → Registration → Application to opt for Composition → Form CMP-02
GST Mandatory Registration: Threshold and Triggers
- Facts
- Registration is the foundation of GST compliance. Miss the threshold, delay beyond 30 days, or supply inter-state without registration, penalty is 100% of tax or ₹10,000. Most small business owners discover the obligation only after a notice.
- Provisions and law
- Sec 22(1); Sec 24; Sec 29(2); Sec 122(1); Rule 8, 9
- Analysis
- Aggregate turnover definition: All taxable + exempt + zero-rated + nil-rated supplies on PAN-India basis. Excludes inward supplies under reverse charge. Includes multiple GSTINs under same PAN. A single person with businesses in Delhi and Mumbai: add both states' turnover for threshold check. Special category states (lower threshold): Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, Arunachal Pradesh, Uttarakhand, Himachal Pradesh, J&K: ₹10L for services, ₹20L for goods. Inter-state, no threshold: The moment a supplier makes even ONE inter-state supply, say a Delhi freelancer invoices a client in Mumbai, registration is mandatory regardless of annual turnover. This is the most commonly missed trigger. Selling on Amazon to customers in another state = inter-state.
- Conclusion
- Calculate aggregate turnover for current FY: all supplies across all states, all businesses under same PAN
- Check: any inter-state supply made? (Even one invoice to another state = registration mandatory)
- Check: are you selling on Amazon/Flipkart/Meesho? (E-commerce aggregator = mandatory registration)
- Check: do you purchase from unregistered suppliers above ₹5,000/day? (RCM may apply)
Blocked Credits: Section 17(5) Complete List
- Facts
- Section 17(5) is the ITC blacklist, goods and services on which you CANNOT claim GST credit even if you paid GST on them. Most businesses unknowingly claim blocked credits, which then get reversed in GST audit. Know the list before filing GSTR-3B.
- Provisions and law
- Sec 17(5); Sec 17(5)(a); Sec 17(5)(b); Sec 17(5)(c); Sec 17(5)(d)
- Analysis
- Most commonly wrongly claimed ITC (and then reversed): (1) Company car purchase, ITC blocked. Many businesses claim ₹3-5L ITC on car purchase and then face reversal. (2) Employee entertainment / team lunch, blocked. (3) Health insurance premium for employees, blocked (unless legally mandated). (4) Construction and renovation of office building, blocked on works contract. (5) Membership fees (gym, club), blocked. Exceptions that ARE allowed: Goods transport vehicle (truck, tempo), ITC available. More than 13-seat vehicles (bus for employee transport), ITC available. Motor vehicles for a driving school, available. Catering service buying food to serve clients, available. Insurance company buying health insurance (to reinsure/sell), available. Plant and machinery vs building: ITC on plant and machinery installation = allowed.
- Conclusion
- Before claiming any ITC, check if the supply falls under Section 17(5) blocked list
- Motor vehicle: check seating capacity and use, >13 seats or goods transport = allowed; company car = blocked
- Employee expenses: food/entertainment/health insurance/club membership, all blocked
- Construction and renovation of building: works contract ITC, blocked
GSTR-1: Outward Supplies Return (Due 11th)
- Facts
- GSTR-1 is the source of truth for the GST system. It feeds your customers' GSTR-2B, which they use to claim ITC. File it wrong or late, your customers lose ITC credit, they call you, you lose the client. Every B2B invoice must be declared invoice-by-invoice.
- Provisions and law
- Sec 37; Rule 59; Sec 37(3); Rule 59(6); Notification 89/2020
- Analysis
- What goes in GSTR-1 table by table: Table 4A: B2B invoices (every invoice to a GSTIN holder, must have buyer's GSTIN, invoice number, date, taxable value, GST amount). Table 5: B2C interstate invoices above ₹2.5L (state-wise). Table 6: Exports, type of export, shipping bill number if zero-rated. Table 7: B2C supplies (domestic, below ₹2.5L interstate or any intrastate). Table 8: Nil-rated/exempt/non-GST supplies. Table 9/10: Amendments to previous months' invoices. Table 11: Advances received. HSN summary (Table 12): If turnover above ₹5Cr: 6-digit HSN mandatory. ₹1.5Cr to ₹5Cr: 4-digit HSN. Below ₹1.5Cr: 2-digit HSN. From FY 2021-22: all B2B invoices must carry HSN/SAC code. Wrong HSN = input GSTR-2B data for buyer is wrong → buyer's ITC is blocked. Why GSTR-1 accuracy matters for your client: Every B2B invoice you declare in GSTR-1 flows into your buyer's GSTR-2B automatically.
- Conclusion
- Compile all outward invoices for the month: B2B (with buyer GSTIN), B2C, exports, debit/credit notes
- Verify every B2B invoice has: correct buyer GSTIN, correct invoice number/date, correct HSN/SAC, correct tax amount
- Check: any amendments needed to previous months' invoices? Declare in Table 9/10
- Check: any exports in the month? Attach shipping bill number and Bill of Lading details
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