CBIC Issued FAQs to Explain Criteria, Procedures, and GST Implications for Restaurant Services Supplied at Specified Premises

GST FAQ, Dated, 28-03-2025

The CBIC has issued FAQs to clarify the criteria for designating “specified premises” for restaurant services under GST, effective from 1st April 2025. Key points covered in the FAQs include the following:

Definition of Specified Premises: A “specified premises” is defined as a place providing hotel accommodation services, where the value of any unit of accommodation exceeds ?7,500 per unit per day. Additionally, suppliers may declare their premises as specified, either during the financial year or at the time of registration.

Tax Rate: Restaurant services supplied at specified premises are taxed at 18% with ITC, while services outside specified premises are taxed at 5% without ITC.

Change in Definitions: From 1st April 2025, the definition of “specified premises” will be based on the value of supply from the previous financial year, rather than the “declared tariff,” which will be omitted.

Objectives of Change: The revised definition is aimed at replacing the ‘declared tariff’ with the transaction value (value of supply), giving certainty regarding the status of specified premises based on previous year’s transactions, and allowing suppliers to declare premises as specified.

Filing a Declaration: Suppliers of hotel accommodation services can file a declaration to declare premises as specified for the following financial year between 1st January and 31st March. This applies to both existing and new registrants.

Validity of Declarations: Once a supplier files an ‘opt-in’ declaration (Annexure VII), it remains valid for subsequent financial years unless an ‘opt-out’ declaration is filed between 1st January and 31st March of the preceding year, taking effect from the next financial year.

After opting out, no further opt-in declaration can be filed for that year. If a supplier has opted out and wishes to revert to being a specified premise, they can file an ‘opt-in’ declaration between 1st January and 31st March for the following year.

The revised definition of “specified premises” will come into effect from 1st April 2025, with suppliers wishing to opt-in filing the declaration by 31st March 2025.

For new registrations between 16th January and 31st March 2025, the ‘opt-in’ declaration must be filed within this period. For registrations after 1st April 2025, the declaration is valid for the remainder of the financial year.

Changes for Multiple Premises: Suppliers with multiple premises must file separate declarations for each premise. Only premises where the value of supply exceeds ?7,500 will automatically be considered specified premises.

New Registrants: New applicants for GST registration can declare their premises as specified within 15 days of receiving their registration acknowledgment.

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