GST On Pizza – Tax Rate, Exemptions & Price Impact

Goods and Services Tax (GST) is a single indirect tax in India that replaced multiple earlier taxes like VAT and service tax. It applies to the supply of goods and services, including food items such as pizza.

The GST rate on pizza depends on how and where it is sold. If you eat the pizza at a restaurant, GST is charged at 5%. But if the same pizza is delivered to your home, the GST goes up to 18%.

Let’s understand this with an example:

Ravi goes to a restaurant and eats a pizza worth ₹300. He pays 5% GST, so his final bill is ₹315. The next day, he orders the same pizza online. Now, he pays 18% GST, so the total is ₹354.

GST on Different Categories of Pizza 

Under the Goods and Services Tax (GST) regime in India, the rate of tax applied to pizza depends on how it is sold and consumed. Different GST rates are applicable when a customer dines at a restaurant, orders pizza for home delivery, or purchases ingredients like pizza base or toppings separately. 

The table below outlines the various categories of pizza-related products, their prices, and corresponding GST rates.

HSN Codes for Different Categories of Pizza

In India, pizza and its related products are classified under specific HSN (Harmonised System of Nomenclature) codes for Goods and Services Tax (GST). 

Read More – GST on Ice Cream

These codes help identify the type of product and determine the applicable tax rate. The classification varies depending on whether the item is a ready-to-eat pizza, pizza base, or toppings. Below is a table listing the relevant HSN codes for different categories of pizza products.

Impact of GST on the Pizza Industry 

The introduction of Goods and Services Tax (GST) in India has had a major impact on the pizza industry. Before GST, many different taxes were applied, like VAT, service tax, and excise duty. 

These taxes were often confusing and different in each state. GST replaced all of them with one uniform tax, which made the system easier to follow for both businesses and customers.

1. Simpler Tax System

Under GST, pizza businesses now charge a single tax instead of many different ones. This has made billing and accounting easier, especially for large pizza chains and delivery platforms.

2. Different GST Rates for Different Services

GST is not the same in all situations. It depends on how the pizza is sold:

3. Impact on Pricing

Pizza delivery has become more expensive for customers compared to dine-in. This is because GST on delivery is 18%, which is more than the 5% charged for eating in the restaurant. Some people may prefer eating out just to save money.

4. More Compliance for Pizza Businesses

Pizza companies must now:

• Register under GST
• Use the correct HSN codes
• File monthly GST returns
• Maintain proper billing systems

While this has increased paperwork, it has also brought more transparency to the industry.

Example:

Ramesh visits a pizza restaurant and eats a pizza worth ₹300. Since it's dine-in, he pays 5% GST, so his final bill is ₹315. Next time, he orders the same pizza online. This time, 18% GST is added, so he pays ₹354. This shows how GST affects customer choices and pricing models in the pizza industry.

Input Tax Credit (ITC) on GST on Pizza 

Input Tax Credit (ITC) means a business can reduce the tax it has to pay by using the tax it has already paid on things it bought for the business.

In the pizza industry, restaurants and food outlets pay GST when they buy things like:

• Raw materials (flour, cheese, vegetables, meat)
• Kitchen equipment
• Packaging materials

If they are allowed to claim input tax credit, they can use the GST they paid on these items to reduce the GST they charge on the pizzas they sell.

When Can Pizza Businesses Claim ITC?

It depends on the GST rate they are charging:

Example

A pizza shop buys cheese for ₹100 and pays ₹18 GST. It then makes and sells pizza online for ₹300 and charges ₹54 GST (18%).

Also Read - GST on Sweets

If ITC is allowed (because it's an online sale), the shop can subtract the ₹18 GST paid on cheese from the ₹54 GST collected from the customer. So, the shop will only pay ₹36 to the government.

Conclusion

GST has brought a uniform tax system to the pizza industry in India. It has replaced multiple old taxes with one single tax, which makes billing and tax filing easier for businesses. However, the tax rate changes depending on how the pizza is sold.

If the pizza is eaten at a restaurant, GST is charged at 5%. If it is ordered online or delivered, the GST rate is 18%, which makes delivery more expensive for customers. Also, items like pizza base and toppings have separate GST rates when sold on their own.

Overall, GST has made the system more transparent, but it has also created some challenges due to different tax rates for different situations.

FAQ’s

1. What is the GST rate on pizza at restaurants?
The GST rate is 5% when pizza is served at a restaurant for dine-in customers.

2. How much GST is charged on a delivered pizza?
Delivered pizza attracts 18% GST, as it is treated as a supply of cooked food without restaurant service.

3. Is GST different for takeaway pizza?
Yes, takeaway pizza may also attract 18% GST, similar to delivery, depending on the restaurant's setup.

4. What is the GST on a pizza base sold separately?
If sold as a branded packaged product, pizza base is taxed at 12% under HSN code 1905.

5. Can restaurants claim input tax credit on pizza sales?
Only if they charge 18% GST. Restaurants charging 5% GST are not allowed to claim input tax credit.
 

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